2022 Index of Economic Freedom

Kyrgyz Republic

OVERALL SCORE55.8
WORLD RANK116
Rule of Law

Property Rights25.1

Judicial Effectiveness11.8

Government Integrity28.8

Government Size

Tax Burden94.8

Government Spending66.7

Fiscal Health79.0

Regulatory Efficiency

Business Freedom56.1

Labor Freedom52.2

Monetary Freedom71.4

Open Markets

Trade Freedom73.2

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 6.6 million
  • GDP (PPP):
    • $32.8 billion
    • -8.0% growth
    • 1.8% 5-year compound annual growth
    • $5,036 per capita
  • Unemployment:
    • 7.9%
  • Inflation (CPI):
    • 6.3%
  • FDI Inflow:
    • $-331.0 million

Kyrgyzstan’s economic freedom score is 55.8, making its economy the 116th freest in the 2022 Index. Kyrgyzstan is ranked 24th among 39 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.

Kyrgyzstan’s economic growth turned negative in 2020 but recovered in 2021. A five-year trend of expanding economic freedom has been broken. Amid falling scores for business freedom, labor freedom, and rule of law, Kyrgyzstan has recorded a 5.3-point overall loss of economic freedom since 2017 and has fallen from the “Moderately Free” category to the “Mostly Unfree” category. The burden of taxes on the economy is relatively light, but judicial effectiveness is dangerously weak.

IMPACT OF COVID-19: As of December 1, 2021, 2,749 deaths had been attributed to the pandemic in Kyrgyzstan, and the government’s response to the crisis ranked 83rd among the countries included in this Index in terms of its stringency. The economy contracted by 8.0 percent in 2020.

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Background

Kyrgyzstan is a Central Asian republic that since independence in 1991 has been plagued by weak governance, organized crime, and corruption. Sooronbai Jeenbekov, who became president in 2017, resigned in 2020 after days of protests that followed a disputed parliamentary election. In January 2021, Sadyr Japarov was elected to succeed him. The influx of Chinese workers, nontransparent Chinese loans and investment, and government contracts won by Chinese firms have bred voter resentment and political instability. Kyrgyzstan is a member of the Russia-backed Eurasian Economic Union. Its economy is heavily dependent on gold exports and remittances from Kyrgyzstani migrants working in Russia and Kazakhstan. Cotton, wool, and meat are the main agricultural products, but only cotton is exported in any quantity.

Rule of Law

Property Rights 25.1 Create a Graph using this measurement

Judicial Effectiveness 11.8 Create a Graph using this measurement

Government Integrity 28.8 Create a Graph using this measurement

Property rights laws and land registration are better than the regional average, but enforcement is undermined by corruption. The judiciary does not operate in a transparent manner, and its effectiveness is compromised by corruption and political interference. Corruption is a serious problem at all levels of society and in all sectors of the economy. Anticorruption efforts have targeted private businesses instead of public officials.

Government Size

The personal income and corporate tax rates are a flat 10 percent, but overall taxation remains erratic and poorly administered. The overall tax burden equals 17.9 percent of total domestic income. Government spending has amounted to 33.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.5 percent of GDP. Public debt is equivalent to 74.3 percent of GDP.

Regulatory Efficiency

Heavy bureaucracy and political instability inhibit business freedom. Rural inhabitants lack an understanding of regulatory matters. Many qualified citizens find employment abroad. Hazardous working conditions in factories are common, and child labor laws are poorly enforced. Despite ongoing pressure from the International Monetary Fund, the government continues to fund very costly energy subsidies as well as state-owned enterprises.

Open Markets

Kyrgyzstan has nine preferential trade agreements in force. The trade-weighted average tariff rate is 5.9 percent, and 18 nontariff measures are in effect. The overall investment climate is subject to considerable risk and uncertainty. The financial sector, dominated by banking, is underdeveloped and lacks an effective regulatory infrastructure. Credit costs remain high. In 2020, measures were taken to increase liquidity in the financial system.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore84.4-5.3
2New Zealand80.6-3.3
3Taiwan80.11.5
4Australia77.7-4.7
5South Korea74.60.6
6Japan69.9-4.2
7Samoa68.36.4
8Malaysia68.1-6.3
9Brunei Darussalam64.8-1.8
10Indonesia64.4-2.5
11Kazakhstan64.4-6.7
12Mongolia63.91.5
13Thailand63.2-6.5
14Vanuatu62.92.4
15Philippines61.1-3.0
16Micronesia6110.6
17Tonga60.83.3
18Vietnam60.6-1.1
19Bhutan59.31.0
20Kiribati59.214.8
21Cambodia57.1-0.2
22Solomon Islands56.50.0
23Fiji56.4-5.8
24Kyrgyz Republic55.8-7.9
25Uzbekistan55.7-2.6
26Papua New Guinea54.6-4.3
27India53.9-2.6
28Sri Lanka53.3-2.4
29Bangladesh52.7-3.8
30Tajikistan49.7-5.5
31Nepal49.7-1.0
32Burma49.6-5.6
33Laos49.2-4.7
34Pakistan48.8-2.9
35China48-10.4
36Maldives47.3-7.9
37Timor-Leste46.31.6
38Turkmenistan46.2-1.2
39North Korea3-2.2
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