WTO Reports On Progress In Kyrgyz Republic

by Tatiana Smolenskaya, Tax-News.com, Moscow

11 October 2006

Reporting on the economic progress of the Kyrgyz Republic since its accession to the WTO in 1998, the organization says that the country has substantially liberalized its formal trade regime by reducing tariff rates and eliminating most non-tariff barriers.

'The Kyrgyz Republic . . . . has made impressive progress since its economic and political transition. Some reforms have been implemented speedily, including farm privatization, price deregulation, financial sector liberalization, and significant state privatization. Laws and regulations have been changed to create a legal framework supportive of a market economy.

'Kyrgyz real GDP has grown almost unabated since 1996. It averaged 4% annually during 2000-05, although it contracted by 0.6% in 2005 due mainly to falling gold output and political instability. Growth has resumed in 2006 but official projections of 5% seem optimistic.'

'Fiscal consolidation continues to contain the Kyrgyz budget deficit, but further reforms, particularly in revenue collection (which is being addressed) could help. While falling from 6.9% of GDP in 2000 to 2.8% in 2005, deficit reductions mainly reflect rising tax collection rather than rationalized expenditure. The deficit is set to rise, albeit temporarily, to 3.3% in 2006.

'With gross domestic investment significantly exceeding gross national saving, there is a substantial current account deficit. While improving as a share of GDP in the early 2000s, it deteriorated sharply from 3.4% (excluding official transfers) in 2004 to 8.1% in 2005, when the negative trade balance escalated from 7.7% of GDP to 17.8%.

'External public debt, at US$2.0 billion in 2005, has fallen to 82% of GDP (130% in 2000), but remains a significant burden, with downside risk to economic prosperity.'

' The Kyrgyz Republic has one of the region's most open trade and investment regimes. Its main trade policy objectives are achieving a more outward-oriented trade regime, greater market access for exports, and improved integration into the world economy. The Government believes trade and investment liberalization will improve economic efficiency and promote export diversification.'

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