The World Bank in the Kyrgyz Republic

Country Context

The Kyrgyz Republic is a land-locked, lower-middle-income country in Central Asia that has abundant natural resources and potential for the expansion of its hydroelectricity production, agriculture sector, and tourism industry.

Since gaining independence in 1991, the Kyrgyz Republic has experienced political instability, with several political upheavals leading to the overthrow of presidents in 2005, 2010, and 2020. Since 2021, the political situation has stabilized, with the presidential form of government having consolidated. The latest parliamentary election took place in November 2021.

To unlock strong, sustainable growth, reforms are needed to attract private investment, boost international trade, and promote sustainable energy. By focusing on these areas, the Kyrgyz Republic can build resilience, drive domestic growth, and reduce dependence on external factors, ultimately securing a brighter future for its citizens.

Strategy

The World Bank and the Kyrgyz Republic

The World Bank is implementing the five-year Country Partnership Framework (CPF) with the Kyrgyz Republic for FY2024-28. This CPF has introduced shifts in focus and approach and is well aligned with, and responds to, the Kyrgyz Republic’s priorities and needs as reflected in the Systematic Country Diagnostic Update, building on the World Bank Group’s comparative advantages. Energy, water, and agriculture are identified as priority sectors for the World Bank financing where engagement is expanding.

Also, there is a particular emphasis on enabling private sector investments and building scalable projects and using innovative financing instruments. Along with it, the CPF includes a strong focus on key global challenges including strengthening climate resilience and reducing emissions, closing gender gaps, supporting jobs and economic transformation, strengthening institutions, and reducing fragility risk. A sound program of activities is in place.

Economy

Recent Economic Developments

Real GDP expanded by 8.1% in the first half (H1) of 2024, driven by consumption, exports, and investment. On the production side, growth has been supported by construction and services. Consumer price inflation fell gradually over H1 2024, to 5.0% in July 2025, driven by declining food price inflation, while fuel price inflation accelerated, and inflation of nonfood and service prices remained elevated.

The current account deficit reached 80.4% of GDP ($2.2 billion) in the first quarter (Q1) of 2024, the largest deficit to date, with “errors and omissions” up to 77% of GDP. Exports of goods and services grew by 22% in Q1 2024, owing to increases in gold, tourism, and trade logistics service exports.  Imports of goods and services increased by 38%, including imports destined for re-export.

The government’s fiscal position remained strong in H1 2024, with an estimated surplus of 5.6% of GDP, supported by increases in tax and non-tax revenues compared to a year ago (by 1.3 and 2 percentage points of GDP, respectively), as well as repayments of on-lent loans to the budget by SOEs. Current and capital expenditures declined by 1.2 and 3.2 percentage points of GDP compared to a year ago, respectively. Public debt decreased from 45.5% of GDP in December to 41.2% by end-June.

Economic Outlook

GDP growth is projected to slow to 5.8% in 2024, as exports are forecast to weaken in H2 2024 due to an expected reduction in re-exports. Aggregate demand is expected to be supported by public and private consumption and investment. On the production side, construction and services  

are expected to contribute the most to growth. GDP is expected to stabilize at 4.5% over the medium term in the absence of structural reforms to raise productivity and potential growth. Assuming the central bank maintains a prudent monetary stance, inflation is projected to be below 5% by end-2024 and thereafter in the medium term.

The current account deficit is projected at 10.8% of GDP in 2024, and then to narrow to 8.2% by 2026 as external demand for goods and services grows and remittance inflows increase.

The fiscal balance is projected at a surplus of 2.6% of GDP in 2024 mainly as a result of repayments of on-lent loans by SOEs and lower capital spending. In the medium-term, the fiscal balance is expected to remain positive despite a rise in current spending while revenues remain broadly unchanged as a share of GDP.