Kyrgyzstan unveils $7 bln investment plan to revive economy


Related Topics


Fri Dec 7, 2012 11:04am EST

* Central Asian country appeals for foreign investment, aid

RussiaChina and international lenders to examine plan

* President: divided country has spurned growth opportunities

By Olga Dzyubenko

BISHKEK, Dec 7 (Reuters) - The Central Asian state of Kyrgyzstan has unveiled a $7 billion plan to revitalise its struggling economy in the next five years with help from Russian, Chinese and Western investment and aid.

The economy in Kyrgyzstan, one of the poorest former Soviet republics, relies heavily on production from a single gold mine and cash sent home by hundreds of thousands of migrant workers.

The new investment plan includes energy, transport and communication projects and agricultural development work.

The mountainous country of 5.5 million people lies along a drug trafficking route from Afghanistan and has twice overthrown a president since 2005. Nearly 500 people died during clashes in 2010 between ethnic Kyrgyz and Uzbeks in the country's south.

In a meeting with donors on Friday, President Almazbek Atambayev said Kyrgyzstan's economy had yet to become self-sufficient in two decades of independence, having squandered much of the industrial legacy left by the Soviet Union.

Atambayev became president in 2011 in the first peaceful transition of power in Kyrgyzstan's post-Soviet history. A pioneer for parliamentary democracy in otherwise authoritarian Central Asia, the country is also prone to political infighting.

"The stability achieved over the last two years is not secure enough," Atambayev said. "Kyrgyzstan's main problem on the road to preserving its independence is internal conflict."

Three opposition politicians, who enjoy strong support from nationalist-leaning Kyrgyz in the south of the country, are in prison awaiting trial for attempting to overthrow the government in October after an anti-mining protest turned violent.



The current coalition government argues that foreign investment is needed to develop untapped mineral riches and the country's significant hydroelectric power potential.

The $7 billion proposal includes 15 energy projects with a cumulative investment need of $5.5 billion, as well as transport and communication projects worth nearly $900 million and agriculture developments requiring more than $400 million.

"The main task for the next five years is to exist as a state in our own right and to lay the foundations for the successful growth of Kyrgyzstan," said Atambayev.

Russia and the United States both operate military air bases in Kyrgyzstan, the latter a crucial hub for NATO troops fighting the Taliban, while China has extended its economic power across the mountainous border to counterbalance Washington and Moscow.

The government plan envisages Russia as the top contributor, with estimated investment in excess of $4.2 billion. Russian power companies InterRAO and RusHydro have already agreed to support large hydroelectric power projects.

China has pledged loans totalling over $1 billion. The U.S. and Turkish governments, as well as several international lending institutions, including the World Bank, have also been invited to participate, the Kyrgyz government said in its plan.

Alexander Avanesov, the United Nations' permanent representative in Kyrgyzstan, said he supported the growth plan in principle and that the U.N. would study the proposal.