Moody’s is one of the world’s three largest rating agencies, alongside Standard & Poor’s and Fitch Ratings. The main purpose of such agencies is to assign credit ratings and analyze risks—that is, to assess the financial stability of borrowers (governments, banks, companies) and their ability to meet debt obligations on time. As a result of this assessment, a credit rating expressed in letters is assigned, reflecting the level of creditworthiness: for example, Moody’s highest rating is Aaa, followed by Aa1, Aa2, Aa3, A1, A3, and then B and C categories.

In addition to the rating itself, the agency also publishes an outlook—“stable,” “positive,” or “negative”—which indicates the probability of a rating change in the medium term. For example, a positive outlook signals a high probability of an upgrade if favorable conditions are maintained; a negative outlook signals the likelihood of a downgrade; while a stable outlook means no change is expected.

Moody’s Upgrades the Outlook for the Kyrgyz Republic from “Stable” to “Positive”

On July 11, 2025, the international agency Moody’s revised the sovereign credit rating outlook for the country, upgrading it from “stable” to “positive.” At the same time, the long-term issuer rating was affirmed at B3. In other words, the current rating itself remained unchanged, but the outlook for its future development was improved to positive, indicating that the rating itself could be upgraded in the future if positive trends continue.

“When a major international agency says: ‘You have good prospects,’ this is not just a rating—it is trust. And trust is the key to investments, jobs, and economic growth. It is important for us to maintain this momentum and continue strengthening that trust,” noted Uluk Kydybaev, Head of the Secretariat of the Investment Council under the Cabinet of Ministers.

The revision of the outlook was attributed to significant improvements in the country’s macroeconomic and fiscal indicators, as well as stronger potential growth rates. These results were achieved thanks to the implementation of key reforms, diversification of economic sectors, and active investment in infrastructure projects. As an example of positive shifts, Moody’s cited the reduction of public debt: in 2020, public debt reached 64% of GDP, but by 2024, it had decreased to 37% of GDP. This substantial reduction has created “fiscal space,” providing the country with a cushion needed for sustainable development and resilience to external shocks.

The Secretariat of the Investment Council under the Cabinet of Ministers considers this improved outlook as a result of systematic efforts to improve the investment climate, advance sustainable reforms, and strengthen confidence in the country’s economy among the business community and international partners.

At the same time, Moody’s specified the conditions necessary for any future upgrade of the rating. The agency emphasized the importance of continuing structural reforms, improving the quality of governance, and reducing the economy’s vulnerability to external factors.

What does a “positive” outlook mean and how can it benefit the Kyrgyz Republic?

Simply put:

Moody’s has given the Kyrgyz Republic a “green light,” essentially saying: “You are moving in the right direction.”
This helps the country attract investment, borrow at lower interest rates, and develop its economy. The higher the rating, the greater the trust—and the broader the opportunities.

Below are the key implications and possible benefits of the improved positive outlook:

• High probability of a rating upgrade.
  A positive outlook from a rating agency means there is a strong likelihood that the country’s credit rating will be upgraded over the next 12–18 months (provided the current favorable trends continue). This reflects Moody’s confidence in the Kyrgyz Republic’s economic policy and indicates that there is a real chance to move up from B3 to a higher rating level in the foreseeable future.
• Increased investor confidence and new investments.
  The improved outlook serves as a signal to investors and the international community, indicating that the country’s economic and financial situation is recovering. The government describes this as an important step toward building confidence in international financial markets and opening new opportunities to attract capital and investments into the Kyrgyz Republic’s economy. In other words, foreign partners and lenders will be more inclined to consider projects in the country, contributing to inflows of financing.
• Stronger position in global markets.
  An upgrade of the sovereign credit profile directly influences the country’s image in global markets. It allows the Kyrgyz Republic to present itself more convincingly in negotiations with foreign investors, partners, and financial institutions.
• Better conditions for business and banks.
  A higher sovereign rating also benefits the domestic financial sector. Financial institutions gain opportunities to attract resources on more favorable terms: loan maturities can be extended, and interest rates reduced. Commercial banks, for example, can more easily secure their own ratings from international agencies, giving them access to cheaper and longer-term funding. Ultimately, the improvement of the country’s overall credit status creates a more comfortable environment for business development and investment projects domestically.
• Cheaper sovereign borrowing.
  A sovereign rating directly affects the interest rates at which the government can borrow abroad. A higher rating makes it easier to issue sovereign bonds—such as Eurobonds—and helps reduce borrowing costs. This enables the Kyrgyz Republic to secure external loans on better terms in the future, directing the savings to economic development.

Moody’s decision to upgrade the outlook on the Kyrgyz Republic’s rating to “positive” is an important signal that the country’s economy is progressing.
While such ratings may seem distant from daily life, they have broad effects: investor trust grows, opportunities for financing business projects expand, and the government can reduce debt-servicing costs and attract more investments into key sectors. In the longer term, this lays the foundation for sustainable economic growth and improvements in people’s well-being. However, to translate this outlook into an actual rating upgrade, the country must continue its reforms and maintain macroeconomic stability to meet the positive expectations of international experts.

The adoption of amendments to the Law of the Kyrgyz Republic “On Restriction of the Circulation of Polyethylene Bags and Plastic Products” (hereinafter – the Law) was the result of more than a year of joint work by the government, the business community, and experts. The issue, initiated by the International Business Council, was considered at a meeting of the Investment Council under the Cabinet of Ministers of the Kyrgyz Republic on December 19, 2023. Based on numerous consultations and analysis of international experience, balanced amendments were developed to ensure compliance with environmental standards while minimizing costs for business.

This outcome highlights how a consistent public-private dialogue can not only remove regulatory barriers but also create momentum for the development of an entire sector — in this case, the recycling industry. The example of amendments to the Law clearly demonstrates how a well-organized process of consultations and analysis can result in balanced environmental and economic policies. This experience also illustrates alignment with the priorities of sustainable development as set out in national strategic documents and the global UN Agenda on the Sustainable Development Goals (SDGs), especially SDG 9 (Industry, Innovation and Infrastructure) and SDG 12 (Responsible Consumption and Production).

General Information

The original version of the Law contained broad restrictions on the use of plastic packaging, including PET bottles, containers, coffee capsules, and other products. These measures were motivated by environmental safety objectives aimed at reducing the harmful impact of polymer materials on human health and the environment in the Kyrgyz Republic. However, in practice, they created significant risks for business, especially in the food industry and retail trade.

The International Business Council received numerous appeals from producers, importers, and recyclers expressing concern over regulatory uncertainty and the potential increase in production costs. The previously applicable provisions of the Law caused apprehension in the business community: lack of clarity in formulations, an extensive list of products subject to prohibition, and vague criteria for recyclability led to legal uncertainty. This particularly affected enterprises in the food industry, which rely on plastic packaging for product safety and logistics.

Amid growing international pressure regarding environmental protection and the transition to a circular economy, the Kyrgyz Republic faced the challenge of ensuring compliance with environmental commitments without placing an excessive burden on the real sector of the economy and consumers. A delicate balance between protecting the environment and supporting economic activity was required.

The Role of Public-Private Dialogue

At the meeting of the Investment Council on December 19, 2023, the draft amendments to the Law were presented by the International Business Council and the Ministry of Natural Resources, Ecology, and Technical Supervision of the Kyrgyz Republic. Together with the Secretariat of the Investment Council, the International Business Council, and members of Parliament, an in-depth analysis was carried out, and consultations were initiated with business representatives. This process became an example of an effective mechanism of public-private dialogue (PPD), through which it was possible to balance environmental policy and the interests of the private sector.

From an institutional perspective, this case demonstrates the maturity of the Investment Council mechanism: an initiative submitted by a business association (IBC) was considered at a high level, found resonance among competent authorities, and evolved into a platform for discussing and adjusting regulatory policy. The Secretariat of the Investment Council played a coordinating and facilitative role, ensuring that the interests of all stakeholders were considered – from recyclers and retailers to environmental experts and legislators.

International Practice and Compliance with the EAEU

Harmonizing national legislation with the technical regulations of the Eurasian Economic Union (EAEU) became a key driver of reform. In international practice, effective approaches typically prohibit only those types of plastics that cannot be recycled. This approach is already applied in EU countries, where the priority is to build a circular economy.

Following these examples, the Kyrgyz Republic excluded PET bottles and food packaging, which are actively collected and recycled domestically, from the list of banned items. A comparative analysis of the practices of the EU, the United Kingdom, South Korea, and Canada shows that most developed countries are gradually moving away from a complete ban on plastic in favor of the so-called “circularity approach”: permitting use subject to effective recycling and re-use. This approach allows production chains not to be destroyed but transformed towards greater sustainability.

It was also essential for the Kyrgyz Republic to eliminate the conflict with EAEU Technical Regulations, which did not envisage a complete ban on PET packaging. The adopted amendments removed this legal inconsistency, thereby reducing risks for cross-border trade and supplies.

Practical Effects for Business

The amendments provided:

• Clarity and predictability: The Law now clearly defines which products are prohibited and which are permitted. This removed the legal uncertainty that previously put PET bottles, food containers, and packaging used in retail and HoReCa at risk of being banned.
• Cost reduction: Previously, businesses faced the necessity to switch to more expensive alternatives — for example, paper bags that cost 8–10 times more than polyethylene ones. Thanks to the adopted amendments, entrepreneurs can avoid a sharp increase in production costs and, consequently, consumer prices.
• Support for the food and recycling industries: The new version of the Law prevents supply disruptions in the food industry and stimulates the growth of the recycling sector. The country already has at least 30 companies engaged in processing PET and other plastics into secondary raw materials, and now they gain a stable source of supply and market legitimacy.
• Alignment with EAEU norms: The Law removes contradictions with EAEU regulations, reducing the risk of customs rejections and facilitating export/import operations.

Conclusions and Next Steps

The experience of working on amendments to the Law of the Kyrgyz Republic “On Restriction of the Circulation of Polyethylene Bags and Plastic Products” demonstrates the effectiveness of the Investment Council as a platform for dialogue and the development of balanced solutions. As a result, the state obtained environmentally oriented regulations, while business gained a predictable environment and reduced administrative and financial burdens.

The next stage will be the development of recycling infrastructure, as well as the implementation of awareness-raising and incentive measures for producers and consumers of packaging.

It is recommended to further strengthen the institutional role of the Investment Council as a tool for regulatory impact assessment. Similar mechanisms (Regulatory Impact Analysis, RIA) have been successfully used in OECD and Central Asian countries. It would also be advisable to introduce a system for monitoring implementation and evaluating the effects of the reforms through indicators such as the growth in the share of recyclable packaging, reduction in business costs, and increased investment in recycling.

In the future, similar approaches can be applied in other areas — for example, regulating packaging in the pharmaceutical and electronics sectors, as well as in waste management. In this way, it will be possible to build a phased and systemic policy based on data and partnership.

Batken, July 10, 2025. An introductory meeting was held in Batken Region to mark the launch of the Regional Investment Council (RIC). Uluk Kydyrbaev, Head of the Secretariat of the Investment Council under the Cabinet of Ministers of the Kyrgyz Republic, presented the Batken RIC team to Baktybek Toksonbaev, First Deputy Plenipotentiary Representative of the President of the Kyrgyz Republic in Batken Region. The Head of the Batken RIC Secretariat is Aiylchy Kudaybergenov.

It should be noted that previously Batken Region already had a Business and Investment Development Council. However, with the establishment of the Secretariat, the Council began operating in a new format and under the new name—the Regional Investment Council—maintaining continuity of priorities and objectives, while transitioning to a more systematic approach as part of a unified RIC network.

Participants emphasized the importance of resuming full-fledged cross-border operations. After nearly four years of suspension, the border between Kyrgyzstan and Tajikistan was reopened on March 13, 2025. In Batken Region, the checkpoints “Kayragach” and “Kyzyl-Bel” were ceremoniously reopened in an online format with the participation of the heads of both states. The resolution of border delimitation issues and the reopening of checkpoints have already led to the revitalization of bilateral trade, creating new opportunities for Batken-produced goods to enter Tajik markets.

Batken Region holds a special economic status as a strategic border territory. Preferential regimes have been introduced here, including tax and investment incentives and simplified government services for residents. Dozens of border villages benefit from tax relief measures: reduced income tax, exemption from profit and sales taxes, and concessions on land and property taxes. In addition, the government provides direct support to Batken by allocating annual budget funds, and the list of villages with special status has been expanded (from 62 to 92), granting residents additional allowances and benefits. These measures significantly increase the region’s attractiveness for living and investment.

Special attention was paid to the tourism potential of Batken Region. The area boasts unique natural and cultural attractions—the Kan-i-Gut cave, the Pyramidal Peak, and the famous Aigul flower—which draw tourists from around the world. Developing infrastructure for ecotourism and active recreation, as well as promoting traditional crafts (such as carpet weaving), can substantially increase visitor numbers and create new economic opportunities. Enhancing tourism appeal, in turn, will help attract investments to the region.

In the context of improving Kyrgyz-Tajik relations, economic cooperation is resuming. The trade turnover between Kyrgyzstan and Tajikistan is demonstrating positive dynamics. This growth has become possible thanks to agreements reached on the border and the intensification of political dialogue. For Batken businesses, new prospects are emerging to access neighboring markets, find partners, and distribute products in Tajikistan.

First Deputy Plenipotentiary Representative Baktybek Toksonbaev emphasized that it is critically important for Batken to transform its public image into a positive one. Due to measures already taken, the situation in the region is stable and safe, and it is necessary to communicate this to a wide audience. Regional leadership aims to present Batken as a dynamically developing area open to tourism and investment.

As part of the visit, representatives of the Investment Council Secretariat also held meetings with the Batken business community, including members of the JIA business association and individual entrepreneurs. This direct dialogue made it possible to discuss pressing business issues and gather proposals to improve local investment conditions.

The launch of the RIC in Batken Region is part of a nationwide effort to strengthen public-private dialogue in the regions and is being implemented within the framework of a trilateral cooperation agreement between the Secretariat of the Investment Council under the Cabinet of Ministers of the Kyrgyz Republic, UNDP in the Kyrgyz Republic, and the PPP Center under the National Investment Agency.

On July 2, 2025, Ala-Too International University and the Secretariat of the Investment Council under the Cabinet of Ministers of the Kyrgyz Republic signed a Memorandum of Cooperation in Bishkek. The document was signed by Rector of the University Nazira Esenalievа and Head of the Secretariat of the Investment Council Uluk Kydyrbaev.

The purpose of the memorandum is to establish a partnership and promote mutually beneficial cooperation aimed at improving the quality of education, implementing joint educational programs, and preparing qualified specialists who are in demand in the labor market. Through this agreement, the university and the government body will combine efforts to enhance training standards and develop the educational environment.

The parties plan to collaborate in various areas, including sharing information on modern teaching methods and research results, jointly implementing projects in the fields of entrepreneurship, investment, and public-private partnerships, organizing scientific and educational activities, and developing proposals to improve economic policy.

Specific initiatives within these areas may be formalized through additional agreements and joint events in line with the provisions of the memorandum.

The signing of the agreement represents an important step in strengthening cooperation between the academic community and public institutions. The document provides a foundation for combining the resources and expertise of both parties to support the development of education and the economy on a mutually beneficial basis.