2020 Index of Economic Freedom

Kyrgyz Republic

OVERALL SCORE62.9
WORLD RANK81
Rule of Law

Property Rights53.6

Judicial Effectiveness31.3

Government Integrity32.0

Government Size

Tax Burden94.1

Government Spending58.5

Fiscal Health66.7

Regulatory Efficiency

Business Freedom73.6

Labor Freedom79.6

Monetary Freedom76.4

Open Markets

Trade Freedom79.2

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 6.4 million
  • GDP (PPP):
    • $24.5 billion
    • 3.5% growth
    • 4.1% 5-year compound annual growth
    • $3,844 per capita
  • Unemployment:
    • 7.2%
  • Inflation (CPI):
    • 1.5%
  • FDI Inflow:
    • $47.0 million

The Kyrgyz Republic’s economic freedom score is 62.9, making its economy the 81st freest in the 2020 Index. Its overall score has increased by 0.6 point, with increases in the three rule-of-law indicators (property rights, judicial effectiveness, and government integrity) offsetting a drop in the fiscal health score. The Kyrgyz Republic is ranked 16th among 42 countries in the Asia–Pacific region, and its overall score is slightly above the regional and world averages.

The economy of the Kyrgyz Republic has been ranked among the moderately free for the past four years. GDP growth during that time has been solid, thanks to gold exports and robust household spending (boosted by remittance inflows from Russia and Kazakhstan); robust wage growth; and a slowdown in inflation.

Advancements in economic freedom are being blocked by ongoing and endemic corruption, weak protection of property rights, and excessive government spending that crowds out private-sector activity.

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Background

Kyrgyzstan is a former Soviet republic that has been plagued since independence by weak governance, organized crime, and corruption. Former Prime Minister and ruling Social-Democratic Party of Kyrgyzstan member Sooronbai Jeenbekov defeated former President Almazbek Atambayev in 2017 elections that were the most competitive in the country’s history. 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 LawView Methodology

Property Rights 53.6 Create a Graph using this measurement

Judicial Effectiveness 31.3 Create a Graph using this measurement

Government Integrity 32.0 Create a Graph using this measurement

Despite significant legislative amendments, the government continues to lack the capacity to enforce property rights properly. Further efforts are needed to reform a judicial system that, though technically independent, is plagued by political interference and corruption. Corruption remains a serious problem at all levels of Kyrgyz society and in all sectors of the economy.

Government SizeView Methodology

The personal income and corporate tax rates are a flat 10 percent. Taxation remains erratic and poorly administered. The overall tax burden equals 19.8 percent of total domestic income. Government spending has amounted to 37.2 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 4.1 percent of GDP. Public debt is equivalent to 56.0 percent of GDP.

Regulatory EfficiencyView Methodology

Recent improvements include strengthened protections for minority investors, streamlining of exports within the Eurasian Economic Zone, more efficient resolution of insolvency, and better contract enforcement. Remittances from migrant workers make up more than a quarter of GDP. The government has used financial subsidies from the Eurasian Economic Union to expand customs, sanitary, and economic infrastructure.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals approximately 102 percent of GDP. The average applied tariff rate is 2.9 percent, but layers of nontariff barriers undermine freedom to trade. The economy is open to foreign investment, but the overall investment framework is not transparent. Financial intermediation has increased, with 25 commercial banks operating and microfinance growing. Credit costs remain high.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore89.40.0
2Hong Kong89.1-1.1
3New Zealand84.1-0.3
4Australia82.61.7
5Taiwan77.1-0.2
6Malaysia 74.70.7
7South Korea741.7
8Japan73.31.2
9Macau70.3-0.7
10Kazakhstan69.64.2
11Thailand 69.41.1
12Indonesia67.21.4
13Brunei Darussalam66.61.5
14Philippines64.50.7
15Fiji63.41.2
16Kyrgyz Republic 62.90.6
17Bhutan62.1-0.8
18Samoa62.1-0.1
19Vanuatu60.74.3
20China59.51.1
21Vietnam58.83.5
22Tonga58.81.1
23Papua New Guinea58.40.0
24Sri Lanka57.41.0
25Cambodia57.3-0.5
26Uzbekistan57.23.9
27Maldives56.53.3
28India56.51.3
29Bangladesh 56.40.8
30Mongolia55.90.5
31Laos55.5-1.9
32Pakistan 54.8-0.2
33Afghanistan54.73.2
34Nepal54.20.4
35Burma540.4
36Solomon Islands52.9-1.7
37Tajikistan52.2-3.4
38Micronesia520.1
39Turkmenistan46.5-1.9
40Timor-Leste45.91.7
41Kiribati45.2-2.1
42North Korea4.2-1.7
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