Tuesday, July 10, 2012 -
Kyrgyzstan’s national economy contracted by 5.6 percent in the first six months of this year compared with the same period in 2011, largely due to falling output from the country’s largest gold mine, government statistics released Tuesday show.
The Central Asian republic’s gross domestic product (GDP) is tied to the fortunes of Kumtor gold mine which last year generated around 12 percent of government revenues and half its foreign sales.
Kyrgyzstan’s GDP grew by 4.9 percent in the first half of 2011.
But a long frigid winter and a string of industrial actions over pay and working conditions has plagued the Canadian-led company, one-third owned by the Kyrgyz government.
In March, Toronto-headquartered Centerra revised downward its 2012 forecast to around 400,000 ounces of gold, from its previous estimate of around 600,000 ounces.
In its report Tuesday, the National Statistics Committee said the country’s GDP would have grown by 3.9 percent and output by 8.3 percent if the gold mine’s operations were taken out of the equation.
The troubles of majority-owner Centerra have been further confounded by a Kyrgyz parliamentary resolution passed last month that will lead to a renegotiation of its contract with the state.
The Kyrgyz government now has a 33 percent share in the Kumtor mine, but opposition politicians are pushing to increase those shares to 66 percent.
Centerra has cried foul and pointed out that Kyrgyzstan has lost hundreds of millions of dollars in falling share value of Kumtor as shareholders abandon their stakes over perceptions of an asset grab by the Kyrgyz state.
Kyrgyzstan's economy had negative growth in 2010, following a series of violent ethnic riots in the southern provinces, and was hoping to use 2012 to recover from the economic impact of those events.