* Dispute with Centerra clouds optimistic growth plan
* Fast growth key to reducing widespread poverty
* Centerra threatens legal action if no venture deal
BISHKEK, Dec 19 Kyrgyzstan is targeting strong
growth in 2014 on the back of output from its gold mining
venture with Centerra Gold but a row between the state
and the Canadian firm threatens to undermine the growth plan.
The budget, which sees gross domestic product rising 6.9
percent next year, was adopted on Thursday with a deficit of
$191.3 million, or 2.4 percent of GDP.
However, a dispute over the size of Centerra Gold's stake in
Kyrgyzstan's largest gold mine, Kumtor, could curtail gold
output, a motor of growth in the small Central Asian economy.
Protests over Centerra's involvement in the mining operation,
staged by Kyrgyz nationalists, briefly halted production in May.
Kumtor, run by Centerra, is an important component of the
economy, contributing 12 percent of GDP in 2011. The economy
shrank by 0.9 percent last year after ice movement in the
high-altitude mine sharply cut gold output.
Mainly due to ramped up production at Kumtor, the economy is
expected to grow this year by 7.8 percent, the International
Monetary Fund said in October.
Kyrgyzstan, a mainly Muslim nation which borders China and
plans to join a customs union with Russia, needs sustained
growth to alleviate deep poverty among its 5.5 million people.
But the optimistic economic outlook for next year is clouded
by the row with Centerra Gold, which this week threatened to
take Kyrgyzstan to arbitration if it fails to reach an agreement
with the government.
The Kyrgyz parliament had demanded the state holds 67
percent in a proposed joint venture to run the open-cast mine.
In October, the legislature voted to tear up a memorandum of
understanding between the company and government, in which
Kyrgyzstan would swap its one-third of shares in Centerra Gold
for a 50 percent stake in the new Kumtor venture.
Centerra has been a focus of protests across Kyrgyzstan,
amid opposition demands that Kumtor should be nationalised. In
May demonstrators briefly cut off electricity supplies and
blocked the main road to the mine.
(Reporting by Olga Dzyubenko; Writing by Dmitry Solovyov;
Editing by Rosalind Russell)