Kyrgyzstan

F

Economy

The breakdown of established trading relationships following the dissolution of the USSR severely depressed the economy of Kyrgyzstan. Markets for the country’s highly specialized industries disappeared and the high cost of fuel imports—subsidized during the Soviet era—drained the country’s money reserves. By 1995 the gross domestic product (GDP), which measures the total value of goods and services, had fallen to 54 percent of its level in 1990. Beginning in the mid-1990s, however, the economy began to reverse its decline, led by increased agricultural output and a growing private sector. In 2005 the GDP was an estimated $2.44 billion.

Kyrgyzstan is widely seen as one of the leaders among the former Soviet republics in economic reform. In 1992 the government initiated the first in a series of privatization programs to bring about the transition from the centrally planned economy of the Soviet era to a free-market system. The initial step was to transfer the ownership of most housing to its occupants. Industrial privatization began in 1994, and by the end of the 1990s at least 75 percent of enterprises formerly owned by the state were privately owned. In 2000 the government sought to reduce its stakes in its largest assets. The state power company, gas provider, telecommunications company, and national airline were all opened to partial private ownership. Agricultural reform, which proceeded much more slowly, involved breaking up state farms and collectives established during the Soviet period. The transition to private farming has been helped by a constitutional amendment, approved by voters in 1998, legalizing private land ownership for the first time. Previously, farmers could lease land from the government but could not own it outright.

G

Agriculture

Agriculture, which in 2005 accounted for 34 percent of GDP, is Kyrgyzstan’s healthiest economic sector. The raising of sheep and cattle remains the dominant agricultural occupation, particularly in the central and eastern mountains. Soviet central planners demanded high meat production from Kyrgyzstan, which forced farm managers to increase herd sizes, resulting in extensive overgrazing. Since independence, the size of herds has been reduced. Vegetables, particularly potatoes and tomatoes, and fruits are grown in the irrigated and intensely cultivated Fergana Valley. Other crops include cotton, tobacco, and sugar beets. Much of Kyrgyzstan’s grain farming takes place in the foothills of the northern mountains.

H

Manufacturing

Once based almost exclusively on agriculture, the Kyrgyz economy underwent extensive industrialization during the Soviet period. Raw materials were imported from other parts of the USSR for processing; the resulting products were then exported to other parts of the USSR. In the economic turmoil associated with the breakup of the USSR, industrial production was cut nearly in half as material costs increased and markets for finished goods disappeared. By 2005 industry contributed only 21 percent of GDP. The processing of agricultural goods such as wool, meat, and leather accounts for much of the country’s manufacturing; other manufactured products include textiles, clothing, and shoes. Kyrgyzstan also makes agricultural machinery and refines metal. Most manufacturing plants are concentrated in Bishkek and its environs.

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I

Mining

Kyrgyzstan has vast mineral resources, including extensive deposits of gold, antimony, and mercury. The country has entered into agreements with foreign companies to assist in developing its gold reserves, estimated to be among the richest in the world. Antimony and mercury refineries are the largest among the former Soviet republics. Coal mining is significant, although production is falling because of aging equipment and increased extraction costs. Unlike neighboring countries, Kyrgyzstan has limited oil and natural gas reserves, although deposits have been found in the Fergana Valley.

J

Energy

The Naryn and Chu rivers are used for hydroelectric power, although considerable hydroelectric potential remains undeveloped. Some 90.46 percent of the country’s electricity is generated in hydroelectric facilities. The remaining 9.54 percent comes from thermal plants burning coal. Sales to China, Kazakhstan, and Uzbekistan make electricity Kyrgyzstan’s principal export.

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