BISHKEK - Kyrgyzstan's economy is demonstrating robust growth but faces risks of overheating due to high inflation and active lending, according to the final statement of the International Monetary Fund (IMF) mission that worked in the country from March 18 to April 1, 2026, 24.kg reports.
Since 2022, economic growth has been driven by expanding trade, an influx of remittances, and a construction boom. This has increased household incomes but pushed inflation above the National Bank's target range (5-7%). IMF experts expect prices to remain high until 2027 and to begin to decline only if macroeconomic policy is adjusted.
Rapid lending growth, significant wage increases, and increased liquidity indicate signs of economic overheating. Growth is projected to slow as indicators normalize, although it will remain above potential due to large infrastructure projects.
In 2026, the budget will shift into deficit after surpluses in 2023–2025 due to rising public sector wages and increased capital expenditures. While the deficit will remain moderate, financing needs are increasing due to quasi-fiscal activities.
External threats include a decline in re-exports, commodity price volatility, and global instability. Internal challenges include cryptocurrency transactions and quasi-fiscal expenditures by state-owned companies, which distort the true picture of budget expenditures.
To build reserves, the Fund proposes eliminating some VAT exemptions, making the income tax progressive, and gradually reducing energy subsidies. The mission emphasized the importance of prudent debt management and strengthening monitoring of state-owned enterprises' fiscal risks.
In April, the World Bank lowered its GDP growth forecast for Kyrgyzstan to 6.1% for 2026 and to 5.8% for 2027. The Asian Development Bank forecasts growth of 8.9% in 2026 and 8.4% in 2027, citing domestic demand as the main driver. The Kyrgyz government expects growth of 8.6%, building on the record 2025 figure of 11.1%.
CentralasianLIGHT.org
April 10, 2026