The Economy of Kyrgyzstan in 1991 - 2005
The post-Soviet period in the Kyrgyz Republic was marked by dynamic changes. Gaining independence, Kyrgyzstan, at the end of 1991 and the beginning of 1992, like all other CIS countries, began the transition to a democratic system of governance and the implementation of radical economic reforms. They had to start and carry out these reforms under conditions of an unprecedented depth of economic crisis. The collapse of the Soviet Union meant a rupture of cooperative ties between economic entities. The activities of many enterprises were completely or partially paralyzed. The loss of markets in the former USSR, as well as changes in the structure of domestic demand, led to a significant decline in gross domestic product (GDP). The GDP fell most sharply in 1993 — it decreased by more than 25%.
To overcome the systemic crisis, decisive actions were taken to establish the foundations of a market economy, which allowed for the formation of a private sector, primary market infrastructure, the introduction of a national currency ahead of other CIS countries, and the implementation of an independent monetary policy, halting hyperinflation. As a result, economic growth resumed in 1996.
When analyzing the socio-economic development of the republic, several stages are clearly discernible.
First Stage — from 1991 to 1995. The sharp reduction in production and income coincided with a sharp increase in the number of people reaching the poverty line (over 50% of the population), inequality, hyperinflation, followed by initial macroeconomic stabilization. The slowdown of inflation became the basis for the first stage of macroeconomic stabilization (1992-1995). The macroeconomic and structural reforms of that period laid the foundations for market regulation of the economy.
Second Stage — from 1996 to 1999. Economic stabilization was observed, with growth occurring in limited sectors (agriculture, gold mining, and energy). However, a high budget and coverage of the budget deficit made the economy extremely vulnerable. The crisis that occurred in 1998-1999 was primarily due to the collapse of the Russian ruble.
Third Stage — from 2000 to March 2005. Economic growth continued, inflation slowed, the budget deficit decreased, and the exchange rate stabilized. However, the problem of external debt became more acute. The reforms of this period were grouped around deregulation issues. Deregulation is understood as a significant change in the role of the state, a reduction in its interference in the activities of the private sector, the elimination of administrative barriers for entrepreneurship, and a reduction in the number of controlling and permitting state bodies. Since 2000, active work has been carried out on the privatization of strategic sectors of the country — energy and telecommunications.
Current Stage — from March 2005.
