19:35, 10 апреля 2026, Bishkek - 24.kg news agency , Aibek SULTANOV
Kyrgyzstan’s economy is showing steady growth but risks overheating due to high inflation and active lending. A concluding statement by a consultation mission of the International Monetary Fund, which visited the country from March 18 to April 1, 2026, says.
Dynamics and inflation
Since 2022, economic growth has been driven by expanding trade, strong remittance inflows, and a construction boom. While this has boosted household incomes, it has also pushed inflation above the target range of the National Bank of Kyrgyzstan (5–7 percent). Experts expect price levels to remain elevated until 2027, gradually declining thereafter, provided macroeconomic policies are appropriately adjusted.
High remittance inflows and elevated gold prices are expected to continue supporting the external sector. However, persistent discrepancies in balance of payments data complicate the assessment of external drivers and highlight the need for improved data quality and transparency.
Amid rapid credit growth, rising wages, and high liquidity, the IMF sees signs of economic overheating, calling for timely policy adjustments.
Growth is expected to slow as trade-related factors normalize, though it will likely remain slightly above potential, supported by major infrastructure projects.
Fiscal policy
Analysts forecast that the budget will shift into deficit in 2026 after surpluses in 2023–2025, mainly due to higher public sector wages and increased capital spending.
Although the projected deficit remains moderate, overall financing needs are rising significantly due to net acquisition of financial assets and quasi-fiscal operations. The IMF stresses the importance of fully reflecting fiscal operations within the budget to better assess the underlying fiscal position.
Economic risks
External risks include a decline in re-export volumes, commodity price volatility, and global instability. Domestic challenges relate to crypto-asset operations and so-called quasi-fiscal expenditures—financial activities by state-owned enterprises or the central bank that effectively act as government spending but are not reflected in the official budget, thereby distorting the true picture of public finances.
Additionally, while Kyrgyzstan has been only limitedly affected by the war in the Middle East, persistently high oil prices could increase inflationary pressure.
IMF recommendations
To build reserves, the IMF recommends phasing out some VAT exemptions, introducing a more progressive income tax system, and gradually reducing energy subsidies.
At the same time, the broadly favorable economic environment offers an opportunity to strengthen policy buffers, recalibrate macroeconomic policies, and accelerate structural reforms to support sustainable, private sector-led growth.
The mission also emphasized the importance of prudent debt management, avoiding quasi-fiscal financing, and strengthening monitoring of fiscal risks—particularly those related to state-owned enterprises—to ensure debt sustainability and policy credibility.
Outlook from other institutions
The IMF mission’s findings regarding a possible growth slowdown echo recent adjustments by other financial institutions.
In April, the World Bank lowered its GDP growth forecast for Kyrgyzstan to 6.1 percent in 2026 and 5.8 percent in 2027.
The Asian Development Bank expects the economy to grow by 8.9 percent in 2026 and 8.4 percent in 2027, driven mainly by domestic demand supported by remittances and public investment under the National Development Program through 2030. At the same time, activity in construction and trade is projected to slow.
The Cabinet of Ministers and the Ministry of Economy of Kyrgyzstan forecast growth of 8.6 percent in 2026, building on strong 2025 results, when the economy expanded by a record 11.1 percent, largely due to active support for domestic demand and lending.