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UPDATE 1-Hard-up Kyrgyzstan adopts $13 bln growth plan
January 14, 2013 / 11:57 AM / in 5 years

UPDATE 1-Hard-up Kyrgyzstan adopts $13 bln growth plan

* Aims to double GDP, ease poverty with aid and investment

* Growth still hinges on single Canadian-led gold venture

* Instability, continued infighting could hinder plan (Recasts with 2013-17 strategy, adds quotes, data)

By Olga Dzyubenko

BISHKEK, Jan 14 (Reuters) - Kyrgyzstan wants to spend $13 billion in the next five years, much of it from foreign investment and aid, as it aims to double the size of the economy and reduce its dependence on a single Canadian-led gold venture.

Hit by the output collapse at the Kumtor gold mine, the economy shrank by 0.9 percent in 2012 after a 6 percent rise a year earlier, official statistics showed earlier on Monday.

Economic woes of the ex-Soviet nation of 5.5 million which hosts both U.S. and Russian military air bases, are aggravated by political instability. Two Kyrgyz presidents have been deposed by violent revolts since 2005.

“People are tired of uncertainty and political turmoil and hope their life will improve in the coming years. We must apply a maximum of efforts to make this happen,” President Almazbek Atambayev said as he, the prime minister, parliamentary chairman and civil society representatives approved the 2013-17 strategy.

The $13-billion package of economic projects, which includes a so far undisclosed list of foreign investment and aid, replaced a draft investment plan unveiled in December and estimated at $7 billion at the time.

Priority sectors include agriculture, communications, infrastructure, mining and power engineering.

Russia is keen to fund and participate in a large-scale Soviet-designed project to build the Kambarata-1 hydropower station. Kyrgyzstan is also seeking loans or investment for the strategic regional railway China-Kyrgyzstan-Uzbekistan.

Operated by Canada’s Centerra Gold the Kumtor, which alone made up 12 percent of Kyrgyzstan’s GDP and over a half of all Kyrgyz exports in 2011, remains the only large Kyrgyz gold deposit being developed.

Kyrgyzstan was forced to cancel the sale of its first batch of mining licences under new legislation after protesters stormed a televised auction on Aug. 28.

THE ARDUOUS TASK

More than two decades after the demise of the Soviet Union, Kyrgyzstan remains one of the poorest former-Soviet states. Its per capita GDP is just a tenth of that in Kazakhstan next door.

The country plans to achieve annual GDP growth of at least 7 percent in the next five years to double the size of its economy in 2017, Atambayev said.

But even in this optimistic scenario, Kyrgyz GDP per capita will stand at just over $2,500 in 2017, official data show. In oil-rich Kazakhstan, Central Asia’s largest economy, per capita GDP is officially targeted to reach $24,000 in 2017.

“Kyrgyzstan must become a strong and democratic state with a stable political system and a rapidly growing economy which will ensure decent living standards for the people,” Atambayev said.

Atambayev won a six-year term 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 infighting.

Three opposition politicians, who enjoy strong support from nationalist-leaning Kyrgyz in the country’s south, went on trial last week for attempting to overthrow the government in October after their protest against Centerra Gold turned violent.

Atambayev said the five-year action plan was directly linked to his remaining tenure of presidency. “I tell you frankly -- when I step down in five years, I will be the one responsible for what has been done,” he said. (Writing by Dmitry Solovyov; Editing by Toby Chopra)

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