Introducing Kyrgyzstan

The Kyrgyz Republic has favorable conditions for steady and sustainable industrial growth, primarily due to the country’s rich natural resources and immediate proximity to growing neighboring markets. Classified as a lower-middle-income country by the World Bank, the Kyrgyz Republic has maintained relatively steady annual GDP growth rates, ranging from 4.6 % to 5.5 % over the past five years, and ranks 97/140 in the Global Competitiveness Report 2019.  Kyrgyzstan’s accession to the Eurasian Economic Union in August 2015 demonstrates the country’s efforts to enter the international market and establish a stable market economy.

Challenges remain however due the strong dependence of the economy on three major but highly volatile sources of income: the exploitation of gold (accounting for about 10 % of GDP), worker remittances (27 % of GDP in 2017), and foreign aid and loans (UNIDO, 2018). In order to counter fluctuations in GDP growth figures, revenues and poverty rates, Kyrgyzstan needs to further diversify economic activities focusing on its strongest assets, including inter alia agriculture, textiles/apparel and water resources, and to establish mechanisms to utilize these competitive advantages. Increasing private sector development and improving occupational skills and productivity in the labor market, especially for youth, are also essential for Kyrgyzstan to reach its full potential.

PCP Kyrgyzstan

The Programme for Country Partnership for the Kyrgyz Republic (PCP Kyrgyzstan) aims to mobilize partners, resources and expertise to accelerate inclusive and sustainable industrialization in Kyrgyzstan.

The PCP rests on a multi-stakeholder partnership between development partners, UN entities, financial institutions and the business sector, under the overall leadership of the national government.Through the PCP, UNIDO provides policy advice to the government, delivers multidisciplinary technical assistance focused on selected priority areas, and facilitates overall PCP coordination and the convening of partners. The various technical projects and programmes are implemented by UNIDO and other development partners, and coordinated through national governing bodies.

UNIDO initiated the programming phase in 2017. The Country Diagnostic for Kyrgyzstan was completed in March 2018, and identified the main challenges and opportunities for advancing industrialization. Based on the results of the Diagnostic, UNIDO supported the Kyrgyz Government in formulating a Strategy for Sustainable Industrial Development for the period 2019-2023 and an accompanying Action Plan. Both the Strategy and the Action Plan were adopted by the Kyrgyz Government on 27 September 2019 (Government Decree No. 502), and will serve as guiding documents for the PCP. The draft PCP Programme Document was revised in line with the priorities of the Strategy and submitted to the Government for approval.

PCP Kyrgyzstan will focus on five priority areas: (i) Modernizing energy infrastructure; (ii) Developing agro-processing value chains with a focus on food and beverages; (iii) Modernizing the construction materials industry; (iv) Upgrading the textiles and apparel industry; and (v) Developing sustainable tourism and its linkages with productive industries.

These will be supported by cross-cutting interventions in areas such as institutional capacity-building in the areas of industrial development, access to finance and investment promotion, export promotion and related quality infrastructure, regional development, environmental sustainability, and information and communication technology infrastructure. The PCP also emphasizes the importance of gender mainstreaming and women's economic empowerment for inclusive and sustainable industrial development.

NATIONAL DEVELOPMENT GOALS

The PCP supports the following national targets from the country’s Programme for the Development of the Kyrgyz Republic 2018-2022, inter alia: