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Economy

Kyrgyzstan Announces Tax Amnesty

The Kyrgyz government has introduced a tax amnesty as part of its efforts to ease the financial burden on citizens and stimulate economic activity. President Sadyr Japarov directed the government to draft the necessary legislation and submit it to the country's Parliament, the Jogorku Kenesh, for approval. One key measure is the abolition of the annual tax on movable property, previously ranging from $10 to $20 depending on vehicle engine capacity. Instead, this tax will now be incorporated into the price of gasoline, resulting in a one som (KGS) increase in fuel costs. “The Cabinet of Ministers of the Kyrgyz Republic is instructed to submit within two months a proposal to exempt vehicle owners from tax obligations unfulfilled as of January 1, 2025, provided there is no judicial act of recovery,” states the presidential decree. Tax Relief for Farmers and Entrepreneurs Farmers will benefit from a suspension of the agricultural land tax until 2030. Additionally, Japarov has prohibited tax authorities from conducting inspections of businesses except for unscheduled checks in cases where an organization or entrepreneur ceases operations. Citizens with tax debts as of January 1, 2022, will also be exempted from repaying those amounts. While the move has been welcomed by many Kyrgyz entrepreneurs, who see it as a step toward fostering business growth, it has also sparked mixed reactions. Some citizens who have already paid their taxes expressed frustration on social media, questioning the fairness of the amnesty. Changes to Tax Administration In a related development, Japarov instructed the Cabinet of Ministers to revise the system of electronic delivery notes used for monitoring business turnover and tax compliance. The updated system will retain electronic invoicing for a limited list of goods, with all other products exempt from such requirements. The recent reforms build on efforts initiated under Almambet Shykmamatov, the new head of the State Tax Service, to streamline Kyrgyzstan’s tax system and reduce administrative burdens on businesses.

Trade

‘Made in Kyrgyzstan’ Program Aims to Boost Exports and Strengthen Global Presence

Kyrgyzstan’s Ministry of Economy and Commerce has launched the National Export Program "Made in Kyrgyzstan" for 2025-2028. Coordinated by the Kyrgyz Export Center, the initiative aims to help domestic producers access international markets, enhance the country’s export potential, and establish the “Made in Kyrgyzstan” brand as a recognizable symbol abroad. Program Goals and Priorities The program focuses on increasing Kyrgyzstan’s export volumes and foreign trade revenues by strengthening the position of Kyrgyz-made goods in global markets. It prioritizes key industries, including textiles, food, jewelry, and halal products, with the goal of making Kyrgyz exports more competitive internationally. To achieve these objectives, the program will: Support local entrepreneurs by promoting participation in international exhibitions and trade fairs. Facilitate access to financing and preferential loans for exporters. Streamline bureaucratic processes to expedite export procedures. Ensure domestic products meet international quality standards and certification requirements. Additionally, the program emphasizes increasing the export of high value-added goods and diversifying Kyrgyzstan’s export portfolio to reduce its negative foreign trade balance. Foreign Trade Trends According to the National Statistical Committee, Kyrgyzstan’s foreign trade turnover for January - October 2024 totaled $13.4 billion, marking a 6.4% increase compared to the same period in 2023. However, the trade balance remained negative, with exports accounting for 23.3% and imports for 76.7% of the total turnover. Key highlights include: Exports: Grew by 25.2% to $3.1 billion, largely driven by gold exports, which made up 34.1% of the total. Excluding gold, exports reached $2.1 billion, an increase of 21.9%. Imports: Rose by 1.8%, amounting to $10.3 billion. Trade with member states of the Eurasian Economic Union (EAEU) - Armenia, Belarus, Kazakhstan, and Russia - amounted to $4.2 billion, a 13.7% increase. Russia (71.8%) and Kazakhstan (26.4%) remained Kyrgyzstan’s largest trading partners within the EAEU. Meanwhile, trade with countries outside the EAEU reached $9.2 billion during the same period. Strengthening Export Potential The "Made in Kyrgyzstan" program aspires to boost exports of diversified, high-quality products while addressing the country’s trade deficit. By empowering local businesses, improving export infrastructure, and fostering global competitiveness, the initiative represents a significant step forward for Kyrgyzstan’s economic growth and international trade ambitions.

Crude Oil

Kazakhstan Revises 2025 Oil Production Target Amid OPEC+ Commitments

Kazakhstan’s Ministry of Energy has lowered its 2025 oil production target by one million tons as part of the country’s commitment to meeting its obligations under the Organization of the Petroleum Exporting Countries (OPEC+) agreements. In 2024, Kazakhstan had already reduced oil production by 2.5 million tons compared to its original plan. The revised target for 2025 now stands at 96.2 million tons, down from the 97.2 million tons announced in December 2024. Despite the reduction, Prime Minister Olzhas Bektenov has instructed the Energy Ministry to implement stronger measures to increase natural gas and oil production to meet planned output levels. Frequent revisions to production forecasts in 2024 highlighted the ongoing challenges in achieving production stability. The lowered forecast is attributed to several factors, including extended maintenance shutdowns at major oilfields. The Tengiz oilfield experienced shutdowns in May and August, totaling 50 days, while the Kashagan oilfield underwent maintenance for 21 days. Additionally, an unscheduled shutdown occurred at the Karachaganak field. Production was further impacted by limitations on gas intake at the Orenburg gas processing plant, which affected operations at Karachaganak. Planned maintenance at the Caspian Pipeline Consortium (CPC)—the primary route for Kazakh oil exports—also constrained transportation capacity. Compliance with OPEC+ agreements added to the reductions in production. In mid-2024, Kazakhstan, alongside Russia and Iraq, submitted compensation schedules to OPEC to fulfill their obligations to cut oil production after exceeding quotas under the OPEC+ agreement. Under this plan, Kazakhstan began reducing production by 18,000 barrels per day in July and further cut output by 265,000 barrels per day in October 2024. These reductions will continue until September 2025. Oil export revenues in 2024 amounted to approximately 2 trillion KZT ($3.8 billion), while total budget revenues from the oil sector exceeded 2.3 trillion KZT ($4.4 billion). As previously reported by The Times of Central Asia, the National Bank of Kazakhstan recently lowered its forecast for oil prices in 2025, reducing the projected cost from $82.5 to $70 per barrel. This, combined with the revised production volumes, is expected to further impact revenues from the oil sector.

Shadow Economy

Kyrgyzstan Reports Decrease in Shadow Economy

Kyrgyzstan’s non-observed (shadow) economy, excluding the agricultural sector, accounted for 19.2% of GDP in 2023, marking a 1% decrease from 2022’s 20.2%, according to the latest data from the National Statistical Committee. The Committee attributes this improvement primarily to reductions in shadow activities within key sectors: wholesale and retail trade and motor vehicle repair by 0.5%, construction by 0.4%, and transportation and cargo storage by 0.2%. Historical data reveals a steady decline in the shadow economy’s share of GDP over recent years, estimated at 20.4% in 2021, 20.1% in 2020, and 22.8% in 2019. Shadow economic activities in Kyrgyzstan are concentrated in sectors such as trade, car repair, transportation, construction, processing industries, hospitality, and various services. Discrepancies persist, however, in shadow economy estimates. In January 2024, Minister of Economy and Commerce Daniyar Amangeldiev noted that international financial institutions assessed Kyrgyzstan’s shadow economy as comprising 60% to 70% of GDP. He explained this divergence by citing differences in methodologies used by the National Statistical Committee and international organizations to calculate the informal economy's size. Although the National Statistical Committee has yet to publish its shadow economy assessment for 2024, Minister Amangeldiyev recently highlighted the positive impacts of a shrinking shadow economy. He credited it, alongside growing trade volumes, with contributing to Kyrgyzstan’s GDP growth last year. For context, the U.S. Department of Commerce’s International Trade Administration estimates Kyrgyzstan’s informal economy at 25% to 72% of GDP, underscoring the challenge of accurately quantifying this sector.

Agriculture

Kazakhstan Will Not Extend Wheat Import Ban

Kazakhstan’s Ministry of Agriculture has announced that the country will not extend the ban on wheat imports, which was in effect from August 21 to December 31, 2024. However, officials have not ruled out the possibility of reintroducing such measures in the future to safeguard the interests of domestic grain producers. “From August 21 to December 31, 2024, there was a ban on the import of wheat into the territory of the Republic of Kazakhstan (RK) from third countries and from the EAEU countries by all means of transport, except for the transit of wheat through the territory of Kazakhstan. Thus, from January 1, 2025, the ban on imports of wheat into Kazakhstan and imports will be carried out without restrictions,” stated the Ministry of Agriculture. The ministry noted that future decisions on non-tariff measures regulating wheat imports would depend on the situation in the grain market. This leaves open the possibility of reintroducing temporary bans on imported wheat if necessary. The current ban was introduced to stabilize domestic grain prices. In October, Deputy Prime Minister Serik Zhumangarin explained that earlier attempts to regulate imports through less restrictive measures had failed. Wheat continued to enter Kazakhstan through unofficial channels at prices lower than the cost of domestically produced grain, disrupting the local market. “We needed this ban to determine the price on the domestic market, to give a message to the domestic market on price,” Zhumangarin stated. He added that the authorities have now stabilized prices and plan to monitor wheat pricing at the border to avoid the need for future blanket bans. The ban had a significant impact on wheat imports from Russia. In the first half of 2024, 1.3 million tons of Russian wheat were imported, often labeled as feed for poultry farms or raw materials for Kazakhstan’s flour milling industry. This figure sharply contrasts with Kazakhstan’s annual grain consumption of 1.7 million tons, based on per capita consumption of 64 kg annually. Kazakhstan entered the ban period with robust grain reserves of 5.1 million tons and anticipated a record harvest of 25 million tons in 2024. In reality, the harvest exceeded expectations, reaching 26.5 million tons, according to the Ministry of Agriculture. Despite these gains, the competitiveness of domestic grain within the country remains a concern. The Times of Central Asia previously reported Kazakhstan’s ambitious export plans, aiming to ship up to 12 million tons of grain from the new harvest to international markets. However, competition with Russian wheat has complicated these efforts. In response to Kazakhstan’s ban, Russia imposed partial restrictions on importing Kazakh agricultural products in October 2024. More critically, Russia began redirecting its wheat exports to third countries that have traditionally been key markets for Kazakh farmers.

Legislation

Kyrgyz Authorities Postpone Fines for Lack of Compulsory Car Insurance

The Cabinet of Ministers of Kyrgyzstan has announced another postponement of fines for motorists without a Compulsory Motor Liability Insurance Policy (CMLIP). Initially set to take effect on January 1, 2025, the penalties will now be delayed until July 1. This is not the first time the implementation of this regulation has been deferred. Authorities concluded that citizens need clearer information about the requirements for mandatory auto insurance. “Currently, changes have been initiated to allow the CMLIP policy to automatically transfer to the new owner of the car when it is sold, which will greatly simplify the insurance process for citizens. We strongly recommend car owners issue a policy in advance to avoid penalties and ensure the protection of their liability on the roads,” stated the Cabinet’s official message. Under the amended law, individuals who fail to secure a CMLIP will face fines of KGS 3,000 ($35), while legal entities will be fined KGS 13,000 ($150). Notably, fines for legal entities have been enforceable since spring 2023. As previously reported by The Times of Central Asia, every motorist in Kyrgyzstan is required to purchase an insurance policy when re-registering a vehicle. However, compliance remains a significant challenge. Despite efforts by the State Insurance Organization to promote compulsory insurance - including warnings about fines - results have been underwhelming. Only around 100,000 vehicles in Kyrgyzstan are insured, out of the 1.6 million cars registered in the country. The Cabinet’s decision to delay penalties aims to provide additional time for public awareness campaigns and to address logistical issues, such as enabling automatic policy transfers during vehicle sales. Officials hope these measures will encourage more motorists to comply with the law before fines are enforced in mid-2025.