Analysis of Social Sector Spending in the Kyrgyz Republic

Executive Summary

Effective social spending enhances human capital accumulation thereby supporting sustained long-term economic growth. The Kyrgyz Republic allocates a relatively high share of public resources to social sectors, yet outcomes in education, social protection, and health remain modest. In 2024, social spending reached 13.2 percent of GDP, but weak efficiency, imbalanced composition (also in terms of equity), and limited targeting reduce its impact on human capital and poverty reduction.

Education spending is high but heavily skewed toward wages, with insufficient investment in learning materials and infrastructure, contributing to weak learning outcomes. Social protection spending is dominated by pensions, limiting its effectiveness in reducing poverty, particularly among children, who face high poverty rates and very low coverage of targeted assistance. In health, spending remains concentrated on inpatient care, while underfunding of primary and preventive services contributes to a high burden of non‑communicable diseases.

Improving allocative and operational efficiency, and equity —by rebalancing spending toward quality‑enhancing education inputs, better targeted social assistance, and primary health care—is essential to translate social spending into stronger human capital outcomes, inclusive growth, and fiscal sustainability.

Overview

Social spending that builds human capital-comprising education, health and social protecting expenditures-supports productivity and long-term growth. Ensuring its efficiency, equity and effectiveness is therefore critical to maximize macroeconomic returns and safeguard fiscal sustainability. Social spending in the Kyrgyz Republic is high by regional standards. In 2024, total social expenditure amounted to 13.2 percent of GDP.  Outcomes across sectors remain weak, however, indicating that the main challenge lies in spending efficiency, composition, and equity rather than spending levels alone.

Education absorbs the largest share of resources but delivers weak learning outcomes. Social protection spending provides limited poverty reduction, particularly for children, reflecting weak targeting and the dominance of pension spending. While the Kyrgyz Republic performs relatively well on aggregate health outcome indicators compared with regional peers, it continues to lag on some critical outcomes, including maternal mortality. In parallel, the rising burden of Non-Communicable Diseases (NCDs) is placing increasing strain on the health system and public finances.

Social Protection

Spending on social protection is high relative to peers but has a limited impact on poverty reduction. Resources are heavily concentrated on pensions, constraining fiscal space for targeted programs for poor and vulnerable households. Child poverty remains elevated—around one‑third of children live below the national poverty line—while the coverage of child benefits remains very low.

Improving efficiency and equity will require better targeting and coverage, supported by integrated social registries, enhanced administrative capacity, and digitalization. Over the medium term, rebalancing spending toward well‑targeted child and family benefits, particularly in early childhood, would strengthen poverty reduction and human capital outcomes while remaining consistent with fiscal sustainability. The Kyrgyz Republic’s recent adoption of a Universal Child Benefit targeting children aged until the age of three is a positive step in this direction [1]. UNICEF is providing technical assistance to support its design and operationalization.

Education

The Kyrgyz Republic spends 5.9 percent of GDP on education, yet learning outcomes remain weak. Around half of students fail to reach basic proficiency in reading and numeracy. Spending is heavily skewed toward wages (around 80 percent)[2], while less than 1 percent is allocated to learning materials. Weak budget execution and widespread multi‑shift schooling further undermine education quality.

Improving outcomes will require rebalancing education spending toward quality‑enhancing inputs, including learning materials and infrastructure, alongside expanded access to Early Childhood Education to strengthen foundational skills. As well, prioritizing spending on recruiting, training, certifying, and incentivizing high-quality teachers is critical to ensure that salary investments translate into improved classroom performance.

Health

Health spending is concentrated on inpatient curative care (52 percent), while preventive care (4 percent) and outpatient services (27 percent) remain underfunded. This contributes to high hospitalization rates for preventable conditions and a heavy burden of NCDs, with significant economic and fiscal costs.

Key priorities include reorienting spending toward primary and preventive care, strengthening the State Guaranteed Benefits Package, and enhancing the role of the Mandatory Health Insurance Fund to improve access to cost‑effective services and essential medicines.

Conclusion

Despite high social spending, outcomes in education, social protection, and health remain modest due to inefficiencies and inequities in allocation and design. Rebalancing spending toward targeted and more equitable social assistance, quality‑enhancing education inputs, and preventive health care—supported by stronger institutions—will be critical to strengthen human capital, reduce poverty, and safeguard fiscal sustainability.

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily represent the views of UNICEF and the International Monetary Fund, IMF Executive Board, or IMF management.

References

• International Monetary Fund (2023). Kyrgyz Republic: Article IV Consultation—Staff Report.
• International Monetary Fund (2025). Kyrgyz Republic: Article IV Consultation—Staff Report.
• International Monetary Fund (2025). Spending Smarter: How Efficient and Well-Allocated Public Spending Can Boost Economic Growth.
• OECD (2025). How are countries balancing teaching staff compensation with broader education investment?
• World Bank (2021). Kyrgyz Republic Education Sector Analysis.
• World Bank (2022). Public Expenditure Review: Health and Social Sectors.
• World Bank. (2022). Analysis of Learning in Armenia
• World Bank (2023). Kyrgyz Republic Poverty and Equity Brief.
• World Health Organization (2023). Global Health Observatory: Kyrgyzstan Country Profile.
• UNICEF (2015). Situation Analysis of Children in the Kyrgyz Republic.
• UNICEF (2025). Kyrgyzstan Social Sector Spending Analysis. Education. Health. Social protection.

[1] Statement by UNICEF Representative to Kyrgyzstan, Samman Jung Thapa, on the introduction of the Universal Child Benefit in Kyrgyzstan

[2] For example, wages account for 70 percent of total education spending on average across regional peers (in both Commonwealth of Independent States and OECD). International comparisons show that while salaries dominate education spending, there is significant variation in how resources are balanced. 

Across OECD countries “teaching staff compensation forms the largest component of education budgets, averaging 58% of expenditure”, with some countries exceeding 75%. At the same time, the World Bank emphasizes that “instructional materials play a critical role in improving learning outcomes,” highlighting the importance of investing in non-salary inputs alongside personnel costs.