A Central Asian country of incredible natural beauty and proud nomadic
traditions, Kyrgyzstan was annexed by Russia in 1864; it achieved
independence from the Soviet Union in 1991. Current concerns include:
privatization of state-owned enterprises, expansion of democracy and
political freedoms, inter-ethnic relations, and terrorism.
Update No: 278 - (01/03/04)
The Kyrgyz are in a difficult position. They lack the resources of Kazakstan or Turkmenistan or the prime position of Uzbekistan. They do not adjoin Afghanistan, which is giving Tajikistan a new prominence. They are likely to remain the poor cousins of Central Asia for a long time to come.
The IMF is hands on
Nevertheless, the international community is not ignoring the remote republic. Kyrgyz Finance Minister, Bolot Abildayev, recently praised his country's cooperation with the International Monetary Fund (IMF). "Cooperation between Kyrgyzstan and the IMD and the three-year Poverty Reduction and Growth Facility programme (PRGF) have helped Kyrgyzstan make structural transformations, overcome the economic crisis, and improve the macroeconomic situation," the minister told a press conference on January 29th.
"Rescheduling part of the foreign debt and a delay in some payments, which would have been impossible without cooperation with the IMF, were key positive moments," the minister said. "The IMF board thinks that Kyrgyzstan has successfully accomplished the second year of the PRGF programme, which was launched in 2001," he added.
"Thus Kyrgyzstan can hope for the success of negotiations with the Paris Club and writing off about US$450m in Kyrgyz debt on bilateral loans." In a related development, Kyrgyzstan will increase its foreign trade turnover 8-9 per cent in 2004 to US$1.32bn, foreign Trade and industry Minister, Sadriddin Dzienbekov, said at a ministry meeting recently.
Production conditions at home and the situation on the foreign market will especially enable increased exports of non-ferrous metals, electricity, cotton, tobacco, and other agriculture products, he said. Exports are predicted to increase by 10 per cent to US$594m, he said.
Talks should be completed this year on Kyrgyzstan joining the agreement on government procurement within the framework of the World Trade Organisation, he said.
First Deputy foreign Trade and Industry Minister, Mukhtar Zhumaliev, told Interfax News Agency that foreign trade is expected to be up 12.8 per cent in 2003 to US$1.21bn, with exports up 11.2 per cent to US$540m and imports up 14.2 per cent to US$670m. Exports without including the Kumtor gold production company are expected at US$324.3m, up 0.5 per cent Kyrgyzstan is expected to have a foreign trade deficit of US$130m in 2003.
Kyrgyzstan last year traded with 102 countries. Kyrgyzstan upped its trade with Kazakstan by 35.2 per cent, with Russia by 34.9 per cent, Tajikistan - 54.25, Turkey - 10.5 per cent, China - 0.3 per cent, and Canada - 140 per cent. In other economic developments, inflation in Kyrgyzstan reached 5.6 per cent in 2003, the National Statistics Committee said. In particular, food prices went up 5.2 per cent in 2003. In the Kygyz law on the state budget, inflation was projected at 5 per cent, and the finance ministry projected it at 4.1 per cent. In late December, Prime Minister, Nikolai Tanayev, said the annual inflation rate would reach 5.1 per cent.
Opposition mounts ahead of 2005 presidential election
The president, Askar Akayev, is supposedly standing down in next year's election to his post. Things cannot be taken for granted here, nor is the opposition doing so. Akayev is not without adversaries. In order to refresh the opposition's political chances, Akayev's critics have been renewing calls for the release of jailed political leader Feliks Kulov recently, eurasianet said in a report.
Amendments to the state's election code, ratified earlier this year, confirm that official campaigning for the parliamentary vote can kick off just 25 days before the actual election date. Anyone ready to campaign for the presidential post will have 35 days to promote themselves. Despite these strictures, opposition and pro-government forces have already started pre-election manoeuvring. The media in Kyrgyzstan has said Kulov is probably the most charismatic and popular politician in the county. Imprisoned three years ago on abuse-of-power charges, Kulov's case was in the spotlight for some time in the former soviet republic. However, public anger over the incident has faded. These days though a number of government opponents view Kulov as the best hope for leading the opposition to victory in 2005.
Since last February Kyrgyz opposition leaders have been in a mess; the result of which came when voters green-lighted Akayev-backed changes to the state constitution.
Opposition leaders are optimistically putting the pressure on Akayev and his administration to allow Kulov's participation in next year's election.
At a public hearing in late January, about 400 Kulov supporters - drawn from opposition political circles and the non-governmental organisation sector - demanded his immediate release. For many participants, Kulov is the principle symbol of what they portray as government despotism. According to eurasinet, Kulov's imprisonment is linked primarily to the fact that he is the incumbent president's most powerful political rival. The government's apparent continued desire to keep him behind bars is a reflection of the administration's concern about his popularity, Topchubek Turgunaliyev, a prominent opposition figure, said. "If Kulov was released, he would win the 2005 presidential election," Turgunaliyev stressed.
The opposition hopes to turn the Kulov issue into a measure of Bishkek's commitment to free and fair elections. Kyrgyz Central Election Commission Chairman, Sulaiman Imanbayev, defended the recent electoral code amendments, saying they will enhance the transparency of votes in Kyrgyzstan. Opposition leaders are obviously sceptical that current authority will refrain from manipulating the system for its own electoral benefit, eurasianet said.
Kyrgyz - Russian agricultural ties in the spotlight
Kyrgyz Agriculture, Water and Processing Industries Minister, Alexander Kostyuk, announced recently that the government will intensify its collaboration with Moscow in matters agricultural, Interfax News Agency reported.
The main areas for working in, with Russia, are the processing of agricultural products, supplying agricultural equipment and agricultural product exports to Russia's Siberian and Urals regions, Kostyuk said. The October 2003 Kyrgyz-Russian investment forum maximised bilateral cooperation in the field of agriculture.
This year, "we expect the arrival on the Kyrgyz market of such Russian companies to engage in equipment deliveries such as Avtoexport and
Rostselmash," Kostyuk said. The Kyrgyz Agriculture Ministry is discussing the licensing of agricultural technology with Russia. The volume of direct investments made in Kyrgyz agriculture over the past two years came to US$45m, nearly a third of which was Russian investment.
Last year direct investment in agriculture came to around US$16, where the level of Russion input represented roughly 30% of the funds, he said.
"Kyrgyzstan now has fifty private Russian companies involved in the country's agricultural sector," Kostyuk noted.
IMF to finance Kyrgyz development programmes
The International Monetary Fund's (IMF) executive board recently finalised the fourth review of Kyrgyzstan's economic performance under the three-year poverty Reduction and Growth Facility
(PRGF) arrangement, the IMF said in a statement, New Europe reported.
The board has green-lighted a request for a waiver of the non-observance of the quantitative performance criterion concerning the ceiling on the cumulative fiscal deficit of the state government - for which there was a minor deviation from the pre-established target, the IMF said.
With the IMF's move, Kyrgyzstan, a former Soviet republic, has the right to draw up to SDR 9.56m (US$14.3m) under the arrangement immediately.
The board also ratified the three-year arrangement effective on December 6th 2001 for a combined SDR 73.4m (US$110m).
Disbursing the amount available upon completion of the latest review will bring total disbursements under the programme to SDR 54.28m (US$81.3m).
The PRGF is the Fund's concessional facility for low-income countries. PRGF-supported programmes are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the Poverty Reduction Strategy Paper
This aims to guarantee that PRGF-supported programmes are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty, IMF said in a statement. PRGF loans carry an annual interest rate of 0.5% and are repayable over 10 years with a 5.5 year grace period on principal payments.
"During the first two years of its PRGF-supported economic programme, the Kyrgyz Republic has made good progress toward achieving the programme's underlying objectives," said Agustin
Carstens, deputy managing director and acting chairman of the IMF.
"Macroeconomic performance is strong: economic growth has recovered and inflation remains moderate," he said.
"The authorities achieved further fiscal consolidation in 2003 by containing expenditure growth and strengthening tax collection. Continued fiscal adjustment is necessary in the coming years to reduce the unsustainable debt burden. This will require strong fiscal discipline, especially during the pre-election period. At the same time, reallocation of spending and a larger tax base are needed to promote social spending and to reduce tax distortions."
According to him, in order to expand the tax base, the important measures taken in early 2003 to extend the value-added tax to large agricultural producers and to introduce a new real property tax must now be fully implemented. Reforms of small enterprise taxation in 2004 are critical to raise the efficiency of the tax system.
"The central bank's monetary and exchange rate policies have been broadly consistent with overall macroeconomic stability. Higher rates of inflation observed in late 2003 mainly reflected developments in the regional markets for wheat and fuel. Continued prudent monetary policy in the period ahead will be essential to keep inflation under control," he said. "Progress in reducing external debt and poverty will depend also on structural reform to diversify and boost exports and maintain strong economic growth," he added. "Key reform initiatives include restructuring of the electricity sector, strengthening the financial system, and
privatisation. Efforts to reduce corruption and improve governance also remain essential to promote investment and growth."
FOREIGN ECONOMIC RELATIONS
Kyrgyzstan to receive energy support from UES
Unified Energy System of Russia (RAO UES) and Kyrgyzstan have agreed to joint investment projects in the field of energy, the UES media department announced recently, Interfax News Agency reported.
The two parties intend to finance preparations for a feasibility study for building Kambarat hydro-power stations 1 and 2, working up a conception for setting up an international water and energy consortium for building hydro-power installations in Kyrgyzstan and the rational management of such resources in the Haryn-Syrdarya reservoir system, according to
The Kambarat complex's construction began in 1990 at a rough cost of US$1.9bn, but Kyrgyzstan was in no shape to invest such money, the government announced, saying more than once it wanted to bring Russia in on the project. Kazakstan has also expressed interest. The UES press release said this agreement was during a visit by senior UES executive, Andrei
Rappoport, and Kyrgyz Prime Minister, Nikolai Tanayev. It also strengthens the terms for a long-term deal for supplying Russia with Kyrgyz energy signed last December. This meeting produced the signing of a partnership agreement between the Kyrgyz company Electric Stations and ZAO INTER RAO
UES, a UES subsidiary whose board of directors chair is Rappoport. Under a contract between these two parties, last September saw the start of electricity shipments from Kyrgyzstan through Kazakhstan to Russia (714m kWh in September-December). "Inexpensive electricity imported from Kyrgyzstan has improved the cost balance of the Russian wholesale market for electricity and made energy (installations) in the republic investment-attractive," the release said.
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