The Republic of Kyrgyzstan was an early leader in the post-communist transition. The country's pro-reform leader, Askar Akaev, a scientist and former president of the republic's Academy of Sciences, quickly established an impressive record of encouraging political and economic liberalization. The Kyrgyz government liberalized most prices, established a national currency, began privatization and financial sector reform, and introduced the legal and regulatory framework for open trade with its neighbors. Non-tariff barriers were removed, and export taxes were eliminated on all goods between 1994 and 1997. In December 1998, the Kyrgyz Republic became the first former communist country to qualify for entrance to the World Trade Organization.
Kyrgyzstan's legal system is based on the continental legal system. Kyrgyzstan's constitution was adopted in 1993. The constitution recognizes a separation of powers among 3 branches of government: an accountable executive, a deliberative legislative, and an independent judiciary. The constitution has provisions to ensure checks and balances, competitive elections, and judicial independence. The judiciary consists of Constitutional Court (to decide issues of constitutional import), the Supreme Court, an arbitration court to resolve commercial disputes. There is a system of lower courts. The constitution was amended in February 1996 by a popular referendum that substantially expanded the powers of the president.
The Kyrgyzstan political system is formally a competitive system. Officials are popularly elected in multi-candidate elections. The country's president is elected by popular vote for a 5-year term. Kyrgyzstan president Askar Akaev was first elected in October 1990 and reelected in December 1995 and December 2000. High officials such as the prime minister and other top cabinet officials are appointed by the president and submitted for approval to the Kyrgyzstan legislature, the Zhogorku Kenesh. There are numerous parties and political movements. The officially registered political parties are the Agrarian Party, the Agrarian Party of Kyrgyzstan, the ASABA party, the Communist Party of Kyrgyzstan, the Democratic Movement of Kyrgyzstan, the Dignity Party, the Fatherland Party, the Justice Party, Kyrgyzstan Erkin Party, the Movement for the People's Salvation, the Ashar Party, the National Unity Democratic Movement, the Peasant Party, the Republican Popular Party of Kyrgyzstan, and the Social Democratic Party.
The Kyrgyzstan government has sought to limit the size of the public sector to enable greater opportunities for the growth of private industry and services. Accordingly the government has sought to reduce the total government revenue as a percentage of the GDP. However, after the 1998 economic crisis, tax collection fell behind anticipated levels. Tax revenue collection relies heavily on industry. Poor industrial performance contributed to the shortfall in tax revenue. Yet during the economic crisis total government expenditures were higher than anticipated in recent years due to the increased costs of social protection programs. International financial institutions urged the Kyrgyzstan government to maintain a tight monetary policy , reduce government spending, and increase revenue collection. Yet the Kyrgyzstan government was reluctant to adopt these politically unpopular measures.