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No clear endgame for Kyrgyz war with gold miner

Monday, May 24, 2021

Significance

Although tensions around revenue-sharing from the mine have recurred over many years, the government's move to deprive Canada's Centerra Gold of control of KGC (which it owns) and the mine is unprecedented. The government denies it intends to nationalise Kumtor, but its actions have already damaged Kyrgyzstan's reputation as an investment destination.

Impacts

  • Rule of law as perceived by foreign investors may be the chief victim.
  • The IMF's March forecast of 3.8% GDP growth is partly premised on higher gold output, which is now looking unlikely.
  • The fiscal position is manageable but leaves no space for additional spending needs.

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