In joining the Eurasian Economic Union, Bishkek said that it was a chance for Kyrgyzstan to reconstruct its economy and build (instead of a speculative economy) an economy which will rely on services, industry and the agrarian sector. Aza Migranyan, researcher at the Institute of Economics, speaks about the economic situation in Kyrgyzstan ahead of the parliamentary elections on October 4th. “Economic growth is observed in the Republic today in spite of the falling trend in the main economic development, which is generally quite odd, and is due to the seemingly high rates of GDP growth. This can be assessed as the pride and achievement of the existing authorities, which can be viewed as the stabilization of the economic situation,” Migranyan says.
However, according to her, such high rates are due to the following factors: “First of all, there is the low comparative base of the previous period, and secondly, the world trends in the gold market, and in Kyrgyzstan the main backbone enterprise is the Kumtor venture in gold ore, working together with Canada, and, accordingly, the growth rate of production at the plant significantly affects the economy in general and the revenue of the state.”
Migranyan thinks that today structural reformatting begins to occur in the economy in the Republic as a positive factor: “The forced transition from rental-oriented mediation to the formation of industrial activity and the formation of a real basis, the real production sector has started. Here there are quite serious competitive advantages and potential. First of all, it should be noted that the main potential is the very active business environment and the development of the business community in the small business sector of the economy, and therefore it can enable the Republic to move on from the peak, where it has been for quite a long time.”
At the same time, the expert says that there are certain problems in Kyrgyzstan's economy. “The Russian-Kyrgyz Business Development Fund was originally aimed at supporting entrepreneurship in the country and contributing to industry in restructuring the economy of Kyrgyzstan. But the problem is that the original terms of lending to small and medium-sized businesses are designated for a starting amount of no less than 3 million. For a small economy and small businesses in Kyrgyzstan, a 3-million start for any economic project is extremely unrealistic for small and medium-sized businesses. It is, in general, very difficult to use even a million. We need to select a unit within the fund which would be involved in micro-crediting, ranging from 100 thousand and more. In this case we can say that the competitive potential of the Republic can be developed, and then it will help the Republic to enter the EAEC smoothly.”
The fund is basically more focused on large infrastructure projects. At present, the fund has received about 9 projects, applications, and most likely, they will, in general, be approved. The management structure of the fund is parity, and the Kyrgyz and Russian sides are represented equally, but the Russian side retains priority in approving major infrastructure projects. This situation, in fact, provides some grounds for optimism about the economic development of the Republic.
As for the population, today there are trends of decreasing incomes. This is primarily due to the decline of the Russian economy, as the incomes transferred by migrants have seriously slumped. “We also have a small trend of returning migrants, and it was necessary to maintain this trend, especially through the development of entrepreneurship, in order to create appropriate local jobs,” Migranyan thinks.
