Fitch Ratings has assigned Kyrgyzstan a Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B’ with a Stable Outlook, citing a mix of strong growth, low debt levels, and solid fiscal performance. The agency’s decision reflects a balanced view of the country’s macroeconomic prospects, structural challenges, and fiscal health.
Kyrgyzstan’s rating is backed by low debt, modest deficits, and steady growth driven by energy and mining. However, the economy remains vulnerable due to reliance on remittances, Russia ties, and weak governance.
The country’s economy has grown robustly in recent years, averaging 9% annually from 2022 to 2024. This has been fueled by re-exports of Chinese goods to Russia, strong capital inflows, and a surge in construction activity. Remittances, estimated at 14% of GDP, and investment capital—primarily from Russia—continue to support domestic demand. Gold mining, especially output from the Kumtor mine, remains a major contributor to exports and fiscal revenue. Fitch forecasts that growth will moderate to 6.5% in 2025 as trade activity stabilizes.
Looking ahead, Kyrgyzstan expects 5%–5.5% growth in the medium to long term, supported by mining, energy investments, and reforms. The government plans to issue up to $1.7bn in bonds to finance hydropower, with a $500mn tranche likely in 2025. Major projects like Kambarata-1 and the China-Kyrgyzstan-Uzbekistan railway are underway.
Since 2021, Kyrgyzstan maintained fiscal discipline, keeping deficits below 1% of GDP and achieving surpluses in 2023 and 2024. The 2024 surplus stood at 1.9% of GDP, supported by strong VAT revenues, profits from state enterprises, and efforts to reduce informality. Increased spending on wages, interest, and capital was balanced by robust revenue growth.
Fitch projects fiscal deficits of 2.8% of GDP in 2025 and 3% in 2026. Revenues are expected to decline slightly, from 35.3% of GDP in 2024 to 34% in 2025 and 33% in 2026. While the tax base is diversified, risks from regional shifts and the Russian economy remain. Public investment in energy will increase capital and debt servicing costs, but ongoing state-owned enterprise reforms and privatization could ease fiscal pressures.
Kyrgyzstan’s general government debt decreased to 37.5% of GDP by the end of 2024, down from 63.6% in 2020, due to nominal GDP growth. External debt makes up 25.8% of GDP, with over half owed to multilateral institutions and 36.6% to China’s Export-Import Bank. Domestic debt is around 30%.
Debt levels are expected to rise to 43% of GDP in 2025-2026 due to Eurobond issuance and local capital market development. Interest payments are projected to reach 6% of revenue by 2026, still below the ‘B’ median of 12.6%. While publicly guaranteed debt remains low, liabilities from loss-making energy firms may increase. Plans to raise electricity tariffs by 2030 aim to reduce fiscal support for the sector.
Kyrgyzstan faced a large structural current account deficit, driven by limited domestic production and high consumption funded by remittances. Re-exports of Chinese goods to Russia surged, but much of this trade wasn't reflected in official statistics due to the Eurasian Economic Union's customs framework. The current account deficit was estimated at 35% of GDP in 2024, but Fitch expected it to decline to 17% in 2025 and 9% in 2026 as trade stabilized and infrastructure imports rose. The impact of U.S. tariffs on Kyrgyzstan was considered negligible.
International reserves increased sharply to $5.1bn at end-2024, up from $3.2bn a year earlier, due to NBKR’s purchase of domestically produced gold and reduced foreign currency sales. Gold now represents over 60% of reserves. Fitch anticipates reserves to rise further to $5.3bn in 2025, supported by Eurobond proceeds and higher gold prices.
Inflation is expected to pick up to 7% in 2025 from 5% in 2024, within NBKR’s 5%-7% target. Price pressures are fueled by strong wage and credit growth and continued fiscal expansion. Although the NBKR cut its policy rate from 13% to 9% in May 2024, monetary policy effectiveness remains limited due to excess liquidity and weak capital markets. The central bank’s large gold purchases injected liquidity, which was later sterilized through NBKR notes and FX operations.
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