BISHKEK, Kyrgyzstan, April 14. The International Monetary Fund (IMF) has projected that Kyrgyzstan's fiscal balance will shift from a surplus of 1.9 percent of GDP in 2024 to a deficit of 3.4 percent of GDP in 2025, Trend.
The IMF expects this deficit to stabilize around 3 percent of GDP in the medium term.
Tax revenue is anticipated to decline by 1 percent of GDP in 2025 and an additional 0.7 percent by 2030, primarily due to reduced trade taxes and VAT on imports as trade growth slows.
On the other hand, capital expenditures are expected to rise by 1.6 percent of GDP in 2025, driven by large-scale infrastructure investments not yet accounted for in the government’s budget. However, these expenditures should moderate in the medium term.
The IMF praised Kyrgyzstan's strong fiscal discipline and advised the authorities to prioritize spending and exercise caution with external commercial borrowing to ensure long-term fiscal and debt sustainability. Reducing fiscal deficits, the IMF noted, would enhance fiscal buffers, improve resilience to economic shocks, and help alleviate inflation pressures.
To expand its fiscal space, the IMF suggested Kyrgyzstan could boost revenue by reducing VAT exemptions and special tax regimes, increasing the progressivity of the Personal Income Tax, enhancing revenue administration, and directing Kumtor gold mine's net profits to the state treasury.
On the expenditure side, the IMF recommended controlling the public wage bill, reducing energy subsidies, improving the efficiency of social spending, and strengthening public investment management.