Akayev has declared that his primary goals are a modernized economy and maintenance of ethnic harmony. Economic priorities are meeting food supply needs, full employment, and the training and retraining of youth. Foreign assistance has been a significant factor in Kyrgyzstan's budget, but Akayev hopes that his economic reforms will permit Kyrgyzstan to rely less on such aid after the year 2000.
The Russian financial crisis and declining world gold prices harmed the Kyrgyz economy in late 1998, contributing to reduced Kyrgyz exports to Russia, increased budget deficits and a budget cut, increased inflation, and the devaluation of the som . Akayev reported in late 1999, however, that GDP had rebounded by 3.5%, fueled by agricultural production, though industrial production continued to decline. He stated that efforts to combat terrorism in southern Kyrgyzstan had cost several million dollars, harming economic recovery. He has been vulnerable to criticism of widespread corruption in his government and of not being able to bring increasing crime under control.
Akayev has championed privatization although his legislature even though most of the public have appeared to oppose it. In October 1998, nonetheless, Akayev cleverly received public approval for private ownership of land within five years by bundling the proposal with other referendum proposals. Privatization has proceeded further in Kyrgyzstan than in the rest of Central Asia. A majority of state industries and most housing and retail outlets have been at least nominally privatized. To encourage agricultural privatization, Akayev set up agricultural committees throughout Kyrgyzstan with powers to abolish bankrupt state and collective farms, boost production, and distribute land to those who want a private farm. In 2001, Akayev outlined his expanded programs for government and private cooperation to reduce the country's poverty dramatically by 2010; as of 2002, poverty had been reduced to the still-high 55%, down by 10% over 1999.
Kyrgyzstan's admission into the World Trade Organization (WTO) in late 1998 was a major accomplishment of Akayev's presidency. At the OSCE summit in November 1999, Akayev called for the OSCE to foster greater international economic cooperation, since "economic stability secures peace and political stability."
A new Constitution was approved in 1993, establishing a democratic presidential system with separation of powers and expansive human rights guarantees. In September 1994, Akayev decreed an October referendum to approve amendments to the Constitution, including provisions revamping the legislative system to weaken it relative to the presidency. He argued that legislative and other provisions of the May 1993 Constitution were too "idealistic" since the "people are not prepared for democracy," and a "transitional period" was needed. Akayev spearheaded another referendum to be held in February 1996 to further alter the Constitution. These changes gave Akayev greater powers to veto legislation, dissolve the legislature, and appoint all ministers without legislative confirmation, while making impeachment more difficult, along the lines of the Russian Constitution. Moving further to weaken the legislature, Akayev spearheaded a third referendum in October 1998 to again amend the Constitution. These amendments sharply restricted the legislature's influence over bills involving the budget or other expenditures and limited a legislator's immunity from removal and prosecution. They also provided for private land ownership and reaffirmed freedom of the press.
Akayev has said that he supports democratization and the adherence to human rights commitments Kyrgyzstan made when it joined the OSCE in 1992. Compared to other Central Asian states, many observers stress, Kyrgyzstan has a less objectionable human rights record. However, according to the U.S. State Department's Country Reports on Human Rights Practices for 2001 , the Kyrgyz government's human rights record is poor: there were problems with freedom of speech and the press, due process for the accused, religious freedom, ethnic discrimination, and electoral irregularities. There are cases of police brutality and arbitrary arrest, and apparent politically motivated arrests. Citizens have only a limited ability to peaceably change their government since elections and referenda have involved "irregular" procedures. There are independent newspapers, magazines, and radio stations, and some independent television broadcasts though the government can influence the media through subsidies. Laws making libel a criminal offense have been used to arrest reporters and silence dissent.
Akayev initially supported a unified Commonwealth of Independent States (CIS) armed forces and preferred that Kyrgyzstan not incur the expense of maintaining its own military. However, faced with the emergence of individual armed forces in the new states of the former Soviet Union, he formed a Kyrgyz armed force in 1992, which numbered about 12,200 ground troops in 1998. Most of the troops are ethnic Kyrgyz conscripts though some officers are Russians. Kyrgyzstan had about 5,000 border troops in 1998. Several hundred Russian border troops (most reportedly were Kyrgyz citizens) guarded the Chinese border for most of the 1990s, but Russia handed over border control to Kyrgyzstan in August 1999. In 2002, there were an estimated 10,900 active armed service personnel in Kyrgyzstan, with 57,000 reserves.
In August 1999, Akayev's leadership was severely tested by an armed incursion by Tajik and Uzbek guerrillas into southern Kyrgyzstan. These guerrillas aimed to create an Islamic state in southern Kyrgyzstan as a base to launch attacks into Uzbekistan. Akayev's military, police, and border forces initially appeared unable to defeat the guerrillas, and Akayev appealed to the Commonwealth of Independent States (CIS) for assistance. Russia agreed to send military equipment, while Uzbekistan launched air strikes and border assaults. Akayev announced in October 1999 that the guerrillas had been driven out of Kyrgyzstan. The Uzbek president, Islam Karimov, criticized Akayev of laxity in combating the guerrillas while Akayev criticized Karimov's forces of not always consulting with Kyrgyzstan before launching attacks against guerrillas.
In January 2002, Legislative Assembly member and opposition leader Azimbek Beknazarov was detained, on what supporters claimed were politically motivated charges. In March, five people were killed during a protest demanding Bekhazarov's release, and in May, the government resigned when senior officials were held to blame for the deaths. Beknazarov was subsequently freed. In June, a rally was held calling for Akayev's resignation, and protests continued throughout the year, leading to a climate of instability and crisis. In February 2003, Akayev held a referendum on his presidency and on amendments to the Constitution to "improve democracy," including the abolition of the two-chamber Parliament in favor of a single chamber, the abolition of party-list voting for Parliament, and immunity from prosecution of former presidents and their families. Voters overwhelmingly approved the amendments and declared Akayev should remain in office until his term expired in December 2005.