Methods of Payment

Medium to large companies use bank transfers as the primary method of payment, while small businesses and consumers primarily use cash. In the capital city of Bishkek, credit and debit cards are widely accepted. The government debt market is small and limited to short maturities, though Kyrgyz bonds are available for foreign ownership. Broadly, credit is allocated on market terms, but with introduced market distortions. Citing the expropriation of the Kumtor gold mine and weak institutions, Moody’s Investors Services downgraded the Kyrgyz Republic’s sovereign credit rating to B3 and changed the outlook to negative from stable in 2021. Bank loans remain the primary source of private sector credit, and local portfolio investors often highlight the need to develop additional financial instruments in the Kyrgyz Republic. International financial institutions often finance large infrastructure projects when foreign companies are involved. For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Foreign Exchange Controls

Foreign residents and non-residents are permitted to buy or sell foreign exchange, but the government can impose limits on transactions, as it did shortly after the Russian invasion of Ukraine in February 2022. There is a current shortage of U.S. dollars and some banks have introduced limits on U.S. dollar withdrawals. Banks are permitted to request certification of funds for transaction exceeding $11,900 dollars. There are no restrictions on the movement of currency by residents or non-residents transiting or importing currency into the country, however, the National Bank of the Kyrgyz Republic (NBKR) charges a fee for overseas transfers in excess of $10,000 for residents and $5,000 for non-residents.  The NBKR could impose limits on overseas transfers in light of the dollar shortage in 2022. The Kyrgyz som fell sharply against the dollar after the Russian invasion of Ukraine but stabilized to 80 som/1 U.S. dollar, compared to 84 som/dollar in 2021. The NBKR conducts weekly inter-bank currency auctions, in which competitive bids determine market-based transaction prices. Banks usually clear payments within a single business day. With occasional exceptions in the agricultural and energy sectors, barter transactions have largely been phased out.

Banking System

The Kyrgyz banking system remains well capitalized with still sizeable, non-performing loans (NPLs). NPLs increased from 10.5 percent to 11.1 percent in 2021. Net capital adequacy ratio decreased from 24.9 percent to 22.7 percent in 2021. Total assets in the Kyrgyz banking system in 2021 equaled approximately USD 4.3 billion. Thirty percent of private loans are dollar-denominated. As of May  2022, the Kyrgyz Republic’s three largest banks by total assets were Kyrgyz Investment and Credit Bank (KICB; approximately USD 435.0 million), Optima Bank (approximately USD 484.0 million), and Aiyl Bank (approximately USD 650.0 million).

The micro-finance sector in the Kyrgyz Republic is robust, representing nearly 10 percent the market size of the banking sector. Trade accounted for 12.5 percent of the total loan portfolio of the banking sector, followed by agriculture (25.7 percent) and consumer loans (34.1 percent). The microfinance sector in the Kyrgyz Republic is rapidly growing. In 2021, around 133 microfinance companies, 88 credit unions, 390 pawnshops and 379 currency exchange offices operated in the Kyrgyz Republic. Over the last five years, the three largest microfinance companies (Bai-Tushum, FINCA, and Kompanion) transformed into banks with full banking licenses.

Local and Correspondent Banks

There are currently 23 commercial banks in the Kyrgyz Republic, with 312[1] operating branches throughout the country; the five largest banks comprise 42.2 percent of the total market. No U.S. bank operates in the Kyrgyz Republic and Kyrgyz banks do not maintain correspondent accounts from U.S. financial institutions. The lack of correspondent accounts is a primary complaint of Kyrgyz businesses and is an opportunity for U.S. banking. There are eight foreign banks operating in the Kyrgyz Republic: Demir Bank, National Bank of Pakistan, Halyk Bank, Optima Bank, Finca Bank, and Kompanion Bank are entirely foreign held. Other banks are partially foreign held, including KICB and BTA Bank, Kyrgyz-Swiss Bank. KICB has multinational organizations as shareholders including the European Bank for Reconstruction and Development (EBRD), Economic Finance Corporation, the Aga Khan Fund for Economic Development, and others.

To access Kyrgyz Republic ICS section on financing, visit the U.S. Department of State Investment Climate Statement website.