Kyrgyzstan must stick to long-term development plans

Kyrgyzstan is one of the poorest countries in Central Asia and stands to benefit greatly from long-term development plans initiated under the auspices of the Central Asian Regional Economic Cooperation (CAREC) Program, if the interim government can move on from the current political crisis and stabilize the country’s economy and political future.

With a GDP per head, in 2009, of just $851 according to the International Monetary Fund and an economy that has contracted significantly in the first quarter of 2010, there are important decisions that must be made and action that must be taken to bring the country in-line with other emerging markets.

In 2008, CAREC members, including Kyrgyzstan came together to discuss the future of regional cooperation and development, a number of important decisions were made in this regard. CAREC issued a statement to Kyrgyzstan news media and regional news media stating that by 2012 they planned to have improved 65% of the corridors (roads, railways, shipping routes and airways) linking the economies of the region, by 2017 they expected these corridors to have been improved by 100%.

In the case of Kyrgyzstan this would involve a number of major investments by the public sector. The Bishkek to Balykchy railway was to be electrified at a cost of $100 million, providing the capital city with a better link to the former industrial hub of Balykchy, which was once a major trade center before the collapse of the Soviet Union. The rail link between Chaldovar (an agricultural center) and Balykchy was to be ‘rehabilitated’ at a cost of $65 million and plans for a rail link between Balykchy and the Chinese border were also reported to Kyrgyzstan news media, although this would not form part of the CAREC initiatives to improve regional trade and transport.

These plans were to be completed by 2017 and 2014 respectively, while the plans for a rail link to the Chinese border were not given a completion date.

In addition, it was announced that Osh Airport would be renovated at a cost of $40 million and the country’s air traffic control capacity would be upgraded.

This was only one part of a comprehensive strategy for the $2.8 billion improvement of various forms of infrastructure in the region, Kyrgyzstan’s part in the plan was a relatively small one. Yet, the total cost of the expansion, upgrades, renovations and new constructions will cost over $205 million, over 16% of the government’s national budget, and in order to afford such projects, the country will need external help from the International Monetary Fund and Asian Development Bank, the institution under whose auspices CAREC was formed.

The current political instability, civil unrest and localized states of emergency do not provide a solid foundation for the development of investor confidence, a crucial component in applying for external finance. The government needs to show an ongoing commitment to the principles of a market-based economy and see through the implementation of the projects envisioned by CAREC in order to bring economic growth to our largely isolated country.