A small Central Asian country with beautiful nature and low incomes, Kyrgyzstan was annexed to Russia in 1876 and became an independent state in 1991. In 2017, for the first time since gaining independence, the president resigned after having worked the entire term under the Constitution. And he was replaced by the former prime minister Sooronbai Jeenbekov, chosen in a democratic election. The economy of Kyrgyzstan is based on agriculture, natural resources extraction and money transfers of citizens working abroad. The country, with the help of foreign consultants, quickly carried out market reforms, which did not greatly help its economy.
The reform
After gaining independence, Kyrgyzstan began to actively change legislation, carried out land reform and privatization. The first country in the post-Soviet space in 1998 joined the World Trade Organization. The economy of sovereign Kyrgyzstan was transferred to market rails as soon as possible. The government has privatized government shares in most enterprises. Decollectivization of agriculture was carried out, now peasant farms prevail here.
The former collective farm land was distributed among the peasants in proportion to the number of family members. Despite the reforms, there was a sharp drop in industrial production and hyperinflation began. About 50% of the population is below the poverty line. At the same time, a mass departure of the Russian-speaking population took place, as a rule, these were highly qualified specialists. Only closer to 2000 did stabilization begin and an economic growth began to take shape. The growth rate of the Kyrgyz economy was mostly positive, only in 2009 the country experienced a crisis related to the collapse of the ruble. The influence of Islamic finance on the economy of Kyrgyzstan is insignificant, projects with the Islamic Development Bank are being implemented in the country, another local bank (CJSC EcoIslamicBank) operates on Islamic principles. The share of assets of financial organizations offering Islamic banking is 1.6%. The main efforts of the country are now aimed at reducing the influence of the state on the economy, administrative barriers, reduction of regulatory bodies. Further reforms will be carried out by the youngest Minister of Economy of Kyrgyzstan, thirty-year-old Artem Novikov. He received his appointment in 2017.
General characteristics of the economy of Kyrgyzstan
The main sectors of the country's economy are agriculture and the services sector, which together account for about 70% of GDP. Almost the only agricultural export product that has good demand in the world market is cotton, but the country produces little, and the price of raw cotton is subject to strong fluctuations, depending on the situation with supply and demand in India and China.
Another export industry is mining, the main ones are gold, mercury, uranium, tungsten, natural gas. Kyrgyzstan also supplies electricity to neighboring countries from its hydropower plants on the Naryn River. A significant contribution to the economy of the native land of Kyrgyzstan is made by labor migrants working in Russia and other more prosperous countries of the post-Soviet space. In some years, their transfers account for up to a third of GDP. A significant problem is the budget deficit, which is 3-5% of GDP, and external borrowing is required to service it. The impact of the global economy on Kyrgyzstan is actually of direct effect, price fluctuations in the global market almost instantly affect the country's income. GDP in 2017 amounted to $ 7.11 billion.
Joining the EAEU
In 2015, the country joined the Eurasian Economic Union, hoping that joining this single market will provide an incentive for economic growth. The removal of barriers to the movement of capital, labor and goods, according to the government, should have attracted investment in Kyrgyzstan. So far, only labor migrants have benefited, who were given the opportunity to not receive work permits in Russia and Kazakhstan - the main points of their migration. Investments and trade are growing slowly, which is also associated with non-tariff restrictions on traditional exports. Slowing economic growth in Russia and lower commodity prices do not allow the country to take full advantage of the common EAEU market.
Mining industry
Kyrgyzstan has large deposits of gold, antimony, mercury, uranium, zinc, tin, tungsten, lead, rare earth metals. The country produces a relatively small amount of coal, oil and natural gas. The largest deposit is Kumtor, the third largest gold deposit in the world and the highest mountain mine. The deposit belongs to the Canadian company Centerra Gold Inc., the share of Kyrgyzstan in which is 33%. The government is expected to increase its stake to 50%, but negotiations are still difficult. The mine was refurbished from 1993 to 1997, and already in 1998 the first million ounces of gold was smelted. In addition, gold is mined at the Zheruisky deposit and Shyralzhi with money received from Japan. The Khaidarkan field is producing mercury and antimony by the state company Khaidarkan Mercury Joint Stock Company. Mercury and its compounds, as well as antimony and fluorspar concentrates are exported. Tungsten is mined at the Trudovoye and Meliksu deposits.
Industry
The industry is represented mainly by the light and food industries. The country has a sufficient number of enterprises (dairy, fruit, berry, alcohol) to provide the population with basic foodstuffs. Light industry in the Kyrgyz economy is the most developed processing industry. More than 200 enterprises produce various types of clothes and shoes that are exported to neighboring countries and Russia.
Energetics
The country has 17 power plants, including 15 hydropower plants, which account for 80% of the electricity. Power plants were built in the Soviet period. In 2012, Kyrgyzstan and Russia agreed to build the Kambarata HPS-1 together, however, the project was not implemented due to the fact that the Russian side did not allocate funding. Every year, the country exports up to 2.5 billion kWh of electricity to Uzbekistan, Kazakhstan and Tajikistan.
Agriculture
Agriculture is one of the leading sectors of the Kyrgyz economy. The country was the first among the CIS states to introduce private ownership of land. The majority of agricultural production is produced by peasant farms (31 thousand). Livestock farming is a traditional occupation of the Kirghiz; sheep and yaks are bred on mountain pastures. In the lowland areas, poultry, pigs and cattle are bred, and vegetables, berries, legumes, and nuts are also grown here. The main agricultural products are cotton, meat, wool, cereals, vegetables, sugar. Cotton is the main export crop; almost all of it goes to Russia, which also supplies a lot of vegetables, fruits, and meat. Due to non-tariff restrictions, the supply of meat and milk to neighboring Kazakhstan is difficult.
