June 2, 2015 / 9:04 AM / 4 years ago

Kyrgyzstan cuts growth outlook on Russian crisis, lower gold output

BISHKEK, June 2 (Reuters) - Kyrgyzstan’s government on Tuesday revised the Central Asian nation’s budget for this year, forecasting slower economic growth and wider fiscal gap due to recession in key economic partner Russia and expected lower gold output.

The budget had originally forecast gross domestic product growth to accelerate to 6.2 percent this year from a 3.6 percent rise in 2014. The cabinet now sees GDP growth at 2 percent in 2015, according to documents seen by Reuters.

The budget deficit is set to widen to 5.7 percent of GDP from an original 3.3 percent.

Kyrgyzstan, a mainly Muslim nation of 5.5 million which borders China, is one of the poorest post-Soviet nations.

It depends heavily on cash remittances sent home by hundreds of thousands of its citizens working in Russia. Last month Kyrgyzstan joined the Moscow-led Eurasian Economic Union.

“Our main partners are in deep crisis due to the rouble’s plunge ... and economic sanctions,” Kyrgyz Economy Minister Oleg Pankratov told reporters after a cabinet meeting, referring to Russia. “Our migrants have started to transfer less cash.”

Money transfers by Kyrgyz workers dropped by 37.3 percent year-on-year in the first quarter of this year to $199.2 million, according to central bank data.

Expected lower production at Kumtor, the country’s biggest gold mine operated by Canada’s Centerra Gold, is also set to hit GDP growth, Pankratov said.

Centerra has said in plans to produce 470,000-520,000 ounces of gold this year, down from 567,693 ounces in 2014. (Reporting by Olga Dzyubenko; Writing by Dmitry Solovyov Editing by Jeremy Gaunt)

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