With strong economic growth percentages year-on-year into the current decade, Kyrgyzstan is showing signs that the end of a two-decade of misery for large parts of the population could be in store – provided strong economic performance can persist. In order to monitor the developments on the socioeconomic side of the story in a better manner, the World Bank has developed new criteria for measurements of the effects of economic changes on people’s living standards. Under the new standards, Kyrgyzstan looks better off than previously.

DSC00214

photograph © 2014 Charles van der Leeuw

“The Kyrgyz Republic has been re-classified from a low income country to a lower-middle income country, according to the 2014 Income Classifications released in July 2014 by the Bank’s Office of Development Economics and Chief Economist,” a World Bank press release on the occasion posted by the Kyrgyz state news agency Kabar read. ”The World Bank updated the analytical country classification, which groups economies of the world into four categories based on 2013 gross national income (GNI) per capita estimates: low income, lower-middle income, upper-middle income, and high income. As of 1 July 2014, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,045 or less in 2013; middle-income economies are those with a GNI per capita of more than $1,045 but less than $12,746; high-income economies are those with a GNI per capita of $12,746 or more. Lower-middle-income and upper-middle-income economies are separated at a GNI per capita of $4,125. The Kyrgyz Republic’s GNI per capita for 2013 is estimated at US $1,200,increasing from US$ 1,040 in 2012.”

 

Even on the downside, improvements, though modest, have been signalled. “The extreme poverty line in Kyrgyzstan has decreased from 4.6% to 2.8%,” AkiPress recently reported referring to the press service of the Ministry of Social Development said Thursday. “In the cities, the extreme poverty line fell by 2.6%, in rural areas by 1.1%. Last year, 159 thousand people in Kyrgyzstan lived in extreme poverty. Since the beginning of the year, 14.3 thousand people received financial support from the Ministry in the form of benefits for pregnancy and childbirth. The average size of benefits was 7.4 thousand som. The total amount of financial support made up to 119.3 million soms. In addition, 1,602 citizens of Kyrgyzstan were reimbursed by funeral expenses. The average size of this type of benefit equaled 3.5 thousand som, Allocated money amounted to a total o 6.7 million som.”

 

Yet, Kyrgyzstan’s struggle for a better life for all its citizens remains highly leveraged. “International institutions have increased funding to Kyrgyzstan up to half a billion dollar in 2014″, 24.kg recently reported quoting PM Dzhoomart Otorbayev as telling a press conference. ”In 2014 the World Bank has increased funding up to $200 million, the Asian Development Bank – up to $250 million, EBRD – up to €70 million,” the report read. Most of the pain is expected to be felt in the first half of the upcoming decade, but repayments of public debts already weigh heavily on the budget even today.

“The amount of payments of Kyrgyzstan’s public debt since 2015 to 2017 will grow up to 20 billion som,” 24.kg wrote in a recent report, referring to the preliminary budget statement of the Ministry of Finance. “Servicing of the public debt of the Kyrgyz Republic in 2015 will be spent 16.7 billion soms, including 4 billion in interest, and 12.7 billion som in lump sum repayments. In 2016, for the payment of the national debt 19.6 billion soms will be allocated, 4.5 billion of which consists of interest, 15.1 billion in lump sum repayment.In 2017, for the payment of the national debt 20 billion soms will be allocated, including 4.8 billion in interest, and 15.2 billion in lump sum repayments Within the breakdown of the multilateral debt the largest creditors are the World Bank, the Asian Development Bank, the International Monetary Fund and the Islamic Development Bank. Major bilateral creditors include Russia, Japan, China, Germany and Turkey.”

In an earlier news note, the agency observed that between 2018 and 2025, Kyrgyzstan will have to spend the equivalent of $200 million per annum on average to meet its debt obligations.

 

It is mainly therefore that the government keeps showing restraint where it comes to socioeconomic support in the form of straight cash. For the moment, most of the socioeconomic gap is not being filled with the help of taxpayers’ money but with income generated by Kyrgyz working abroad – mainly in the Russian Federation and until early this year also in Ukraine. “Remittances from Kyrgyz labour migrants amount to the equivalent of 3 billion US dollar,” 24.kg reported last week, referring to socioeconomic expert Asel Murzakulova as telling a forum in Bishkek dedicated to the Kyrgyz diaspora. “Labour migration has become one of the sectors of the Kyrgyz economy,” the article read. “From 2009 to 2013 the volume of remittances has increased up to 31 percent of GDP. And this is only according to official data. The real level of remittances is much higher. Labour migration destroys the country in its consequences. Labour surplus is not its cause. The core reason for migration in Kyrgyzstan consists of poor management and degradation of the country’s economy,” Murzakulova was quoted as stating.