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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Press Relations Office > Press Releases (Other) > 2002 > November
Fact Sheet
Office of the Spokesman
Washington, DC
November 21, 2002


The Kyrgyz Republic: Background

The Kyrgyz Republic, a mountainous country of 5 million people, has distinguished itself by adopting relatively liberal economic policies and achieving 6 straight years of real economic growth. Economic policymakers hope to sustain growth via exports and by attracting foreign investment. It is the only World Trade Organization member in Central Asia.

Growth reached 5.3% in 2001. While analysts expect a drop to just under 1% this year, due to reduced gold and energy exports, both the government and the International Monetary Fund project rebound next year. Inflation has been moderate, at 3.7% for 2001. The fiscal deficit remains substantial, at 5.2% of  the Gross Domestic Product last year, but the government has made steady strides in controlling it. Tax revenue remains low, at 12.1% of the Gross Domestic Product in 2001; however, the government has taken steps to rationalize the tax structure with the goal of encouraging greater compliance.

The external outlook of the Kyrgyz Republic has stabilized since 1998. The International Monetary Fund approved a 3-year, $93 million Poverty Reduction and Growth Facility (PGRRF) in 2001, and the Fund completed the first review in July. The Paris Club approved a non-concessional debt flow rescheduling in March for the Kyrgyz Republic (an International Development Association-only country), and a goodwill clause would make a stock rescheduling available upon successful completion of the Poverty Reduction and Growth Facility. The current account deficit should rise slightly from last year's 3.3% of the Gross Domestic Product, but expected capital inflows should cover this amount. Renewed confidence in the Kyrgyz currency (som) has permitted high money growth without inflation, and international reserves (more than 4 months' imports) have exceeded International Monetary Fund targets. While exports can be volatile, due to fluctuations in gold prices and electricity sales, the Kyrgyz Government is focused on promoting export growth. As part of this strategy, the Kyrgyz Government is working to attract foreign investment.

Growth and increased social spending have helped the Kyrgyz Republic to reduce poverty. A World Bank survey found that poverty fell from 52% in 2000 to 48% in 2001. In April, the government adopted measures to increase the lowest government salaries and pensions to compensate for a 42% electricity tariff increase, leading to a 5% real increase in social spending. The Kyrgyz Government is focused on promoting economic growth as the surest path to poverty reduction and hosted a Consultative Group meeting in October to present the National Strategy for Poverty Reduction.

Released on November 21, 2002

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