This paper provides a country survey of the Kyrgyz defence economy. Kyrgyzstan is small landlocked country situated in Eastern Central Asia. It borders Kazakhstan, Uzbekistan, Tajikistan and China, with a population of nearly five million people. Although The Kyrgyz Republic introduced the most liberal reforms in Central Asia, its economy remains unstable with low level of economic growth. Moreover, Kyrgyzstan has a weak state structure, a history of ethnic tension, inequality and poverty. Defence burden of economy is 1.3 in 2006. Because of lack of capacity of Kyrgyz armed forces, the country faces Uzbek government military activities in the outside and political instability inside the country. The first part of the paper presents a brief economic background of Kyrgyzstan, its armed forces and its structure. The remains of the paper focus on the macroeconomic impacts of the defence spending in Kyrgyzstan. The study concludes that defence expenditure of Kyrgyzstan is less than optimal and it retards the development of the economy..