Kyrgyz Republic - Country Commercial Guide
Trade Financing

It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.

Last published date: 2021-10-05

Methods of Payment

The economy of the Kyrgyz Republic is primarily cash-based, although non-cash consumer transactions, such as debit cards and transaction machines, have quadrupled in the last five years. In 2020, Moody’s Investors Services assigned the Kyrgyz Republic a sovereign credit rating of B2 and changed the outlook to negative from stable. 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

introduced market distortions. 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. 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, without limits on currency exchange transactions. Banks are permitted to request certification of funds for transaction exceeding $11,900 dollars. There are no restrictions on the movement of currency by non-residents transiting or importing currency into the country.  The Kyrgyz som follows a free-floating exchange rate, with periodic FX interventions by the National Bank of the Kyrgyz Republic (NBKR) to mitigate the risk of exchange rate shocks.    Although the Kyrgyz som is typically considered to be stable, its value against the U.S. dollar fell by 20% in 2020, from 69 som to 83 som per U.S. dollar. 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. Complaints of currency conversion issues are rare. 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 8.0 percent to 10.5 percent in 2020, with restructured loans in excess of 20 percent.  Net capital adequacy ratio increased from 24% to 24.9% in 2020. Total assets in the Kyrgyz banking system in 2020 equaled approximately USD 3.5 billion.  As of August 2019, the Kyrgyz Republic’s three largest banks by total assets were Kyrgyz Investment and Credit Bank (KICB; approximately USD 427 million), Optima Bank (approximately USD 525.0 million), and Aiyl Bank (approximately USD 383.0 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 28.6 percent of the total loan portfolio of the banking sector, followed by agriculture (19.8 percent) and consumer loans (10.9 percent).  The microfinance sector in the Kyrgyz Republic is rapidly growing. In 2020, around 134 microfinance companies, 92 credit unions, 308 pawnshops and 387 currency exchange offices operated in the Kyrgyz Republic. Over the last four 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% 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.  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.