Kyrgyzstan is making progress towards the MDGs and is on track to achieve the target of halving extreme poverty between 2001 and 2015. For other important human development goals, however, the targets are likely to be missed, owing to resource constraints and limited policy implementation capacity. There have also been setbacks caused by problems of governance and political instability that impeded effective policymaking at various points during the 2000s. As a consequence, finding a realistic pathway to achieve all MDGs is still a challenge in this country.

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Foreign transfers and tax revenue under a baseline and alternative financing scenarios, 2007-2015

A combination of increased tax revenues and more inflows of foreign aid could be an acceptable MDG financing mechanism in Kyrgyzstan. The increase in tax collection would be moderate (2.5% of GDP) compared to a scenario where only tax revenues were raised (8.3% of GDP). Additional inflows of foreign grants (amounting to nearly 6% of GDP) would substantially reduce the need to raise tax revenues. However, even this amount of foreign aid (more than $260 million per year) is unexpected given past trends.

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Additional public spending by sector under a mixed-financing MDG scenario, 2007-2015

An analysis of Government spending by sector indicates that the main increases needed to achieve the MDGs, relative to a baseline scenario, are: recurrent spending in primary education (around 2% of GDP); recurrent health spending (around 2% of GDP); and, mainly, investments in the primary cycle of education (around 3% of GDP). The last estimate reflects a lack of investments in the education sector during the past two decades and growth of the population at school age. Making the needed financial injections possible will require difficult policy choices.