Tax incentives, soft credit programs, and economic welfare: Qualitative study of rural farmers in Kyrgyzstan

Agriculture remains central to Kyrgyzstan’s economy, yet rural farmers continue to face deep-rooted challenges that hinder their economic progress. In the aftermath of the COVID-19 pandemic, the country’s heavy reliance on food imports—particularly from Eurasian Economic Union (EAEU) partners—exposed severe food security vulnerabilities. The sudden restriction of flour imports from Russia and Kazakhstan highlighted the country’s limited domestic production capacity. In response, the Kyrgyz government introduced a tax moratorium on agricultural land (2022–2024) and launched targeted soft loan programs through state banks such as JSC Aiyl Bank and JSC RSK Bank to improve the financial stability of farmers and stimulate productivity. This study explores how these policy measures have impacted smallholder farmers by drawing on in-depth interviews with farmers across three provinces. While tax exemptions were acknowledged, they were often seen as offering only marginal benefits. In contrast, soft credit programs provided real opportunities for investment in inputs and machinery, yet access remained difficult due to complex procedures and collateral requirements. The findings suggest that although recent reforms have contributed to reducing food imports and strengthening food security, the current structure of support programs needs refinement. Expanding outreach, simplifying loan access, and better aligning policies with farmer realities are key to achieving inclusive rural development.