TOURISM IN KYRGYZSTAN - Tourism in Central Asia: Cultural Potential and Challenges - page 272

In the first couple of years after independence, Kyrgyzstan seemed to
have a good potential for economic development (The World Bank, 1993).
Akaev was quite enthusiastic about the reform process himself, promising
to make his country “the Switzerland of Central Asia” with its beauti-
ful mountains and future goal of becoming a financial center and a trans-
port hub (Olcott, 2005). Akaev's reforms began as early as January 1992
with price liberalization (Kort, 2004) as a result of which all prices would
be liberalized by 1994 (Anderson and Pomfret, 2003). Kyrgyzstan was
also successful in curbing hyperinflation and bringing the annual inflation
rate below 50% by 1995 (Anderson and Pomfret, 2003). A 85% of 4,700
state enterprises were privatized between 1991 and 1994 (Anderson and
Pomfret, 2003). The country became a member of the World Bank on 18
September 1992 (The World Bank, 1993) and was the first post-Soviet
republic to introduce its own convertible currency, the som, to replace the
ruble (Anderson, 1999; Capisani, 2000). Likewise, Kyrgyzstan was the
first country to be a member of the World Trade Organization (W.T.O.) in
1998. It seemed as if the country would succeed in adopting a liberal trade
and investment policy as “the most dynamic reformer” of the Soviet suc-
cessor states (Anderson and Pomfret, 2003). Kyrgyzstan was also heav-
ily supported by Western countries and international financial institutions
such as the World Bank and the IMF. 14 Some international firms preferred
Kyrgyzstan for their investments, such as the Canadian-run Cameco Com-
pany that became interested in the Kumtor gold mine as early as 1992. 15
Despite the fact that these reforms were initially successful in terms
of GDP growth, increased investments, and successful fiscal adjustments
(The World Bank, 2001), “the outcome during the first decade has been
at best mixed” (Anderson and Pomfret, 2003). As some reports indicat-
ed (The World Bank, 2005), “Favorable national circumstances, such as
supportive macroeconomic conditions, friendly investment climates and
market-expanding trade agreements, contribute to competitiveness, but
they do not guarantee success.” In time, the country started to have seri-
ous economic, political and social problems stemming mostly from the
failed economic reforms. At the end of the first decade of independence,
Kyrgyzstan had 1.7 million dollars debt, approximately 130% of its GDP
14 For a detailed analysis of economy in the first couple of years in Kyrgyzstan, see The World Bank
(1993).
15 This joint venture provides a significant part of the country's GDP and is one of the most success-
ful enterprises in Kyrgyzstan (Mahnovski, Akramov, and Karasik 2007; Özcan 2010; Pomfret 2006).