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International Monetary Fund

Abstract

This occasional paper provides an overview of the economic reform experiences of the Central Asian states of the former Soviet Union since their independence at the turn of the decade. The choice of countries reflects not only a geographical grouping, but also similarities in the types of transition challenges faced by these countries notwithstanding considerable variations in their sizes, ethnic composition, resource endowments, and economic structures. The paper attempts to identify a number of key macroeconomic and structural areas where the slower reformers in the group might benefit from the experience of the faster reformes.

Emine Gürgen

Abstract

At the outset of their transition to a market economy, the social and economic indicators in the Central Asian states of the former Soviet Union—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—generally fell short of the standards of the region as a whole. Notably, per capita incomes ranged from just over 50 percent (Tajikistan) to about 90 percent (Kazakhstan) of the Soviet Union average, while social indicators, such as life expectancy, infant mortality, health facilities, and housing conditions, were considerably worse in most cases. All five Central Asian states—landlocked and distant from world markets—depended heavily on an intricate Soviet system of trade routes and energy pipelines for essential input supplies and exports. Rich agricultural, mineral, and fuel resources of the region, though, made it a potentially attractive outlet for foreign investors. Following a long period of isolation and catering to the needs of the Soviet Union, these countries faced the tough challenge of how to exploit more effectively their natural resources to improve living standards, while simultaneously introducing the systemic changes needed to achieve a market framework and to integrate their economies with the rest of the world.

Ivailo Izvorski

Abstract

The five former states of Soviet Central Asia—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—extend from the Caspian Sea in the west to China in the east, and from central Siberia in the north to Afghanistan and the Islamic Republic of Iran in the south, covering a combined area equivalent to just over one-fifth of Russia’s total land area. The region is rich in natural, agricultural, mineral, and fuel resources. Since the beginning of the 1990s, all five countries in the region have worked toward exploiting their resources more fully while moving their economies toward a market framework. Their progress with economic reforms has been influenced to a considerable extent by their political structures, ethnic characteristics, and remoteness from major world markets.

Ivailo Izvorski and Emine Gürgen

Abstract

The differences in resource endowments and initial economic conditions influenced attitudes toward economic transformation in the Central Asian states. In 1992, Saparmurat Niyazov campaigned for the presidency of Turkmenistan on the platform that the country’s rich gas and oil resources would turn it into the Kuwait of Central Asia. Economic reforms were postponed largely on the expectation that sharp initial gains in the terms of trade and subsequent opening up of new export markets for the country’s energy resources would allow for a gradual pace of reform. Likewise, Uzbekistan’s preindependence specialization in cotton and gold, and its self-sufficiency in energy, may have contributed to its reliance on a more gradual and state-led approach to economic transformation.1 While cotton and gold exports were successfully redirected to new markets, a fall in the world price of gold forced the authorities to rethink their strategy and to introduce a comprehensive reform package in 1994, which became stalled by 1996. By contrast, Kazakhstan, the third most resource-rich state in Central Asia, refrained from over-reliance on a single product (oil) and pursued a more decisive approach to transformation. In addition, its close economic ties to Russia and a significant Russian population within its territory made it advantageous for Kazakhstan to reform at a comparable and, in some areas, at an even faster rate than Russia, in order to minimize the disruptions to economic relations between the two countries.

International Monetary Fund

The Kyrgyz authorities have maintained macroeconomic discipline in recent years, despite a challenging political environment. This 2006 Article IV Consultation highlights that the economic activity is rebounding in 2006, with year-over-year real GDP growth of 3.2 percent through September, after a slight contraction in 2005. Inflation is projected to rise slightly to just below 6 percent during 2006. Remonetization has gathered pace in recent years, but the financial system remains relatively shallow by international standards. Comprehensive financial reforms are under way and are slated to gain momentum under the IMF-supported program.

International Monetary Fund. Asia and Pacific Dept
This paper discusses Bangladesh’s Fifth and Sixth Reviews Under the Extended Credit Facility Arrangement. The current ECF arrangement, approved in April 2012, is drawing to a close. Over its three years, macroeconomic stability has been buttressed: growth is strong, inflation has eased, the public debt-to-GDP ratio has remained stable, and foreign reserves remain adequate. Progress on revenue mobilization, however, has been weak. Political uncertainty remains a key risk to the outlook. All performance criteria for the combined reviews have been met, all prior actions have been completed, and macroeconomic stability has been maintained. The IMF staff recommends completion of the combined reviews.
International Monetary Fund
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
International Monetary Fund
The Kyrgyz Republic is recovering from a deep political crisis. Agriculture, tourism, mining, and textile production will be important drivers of growth. Strong export-oriented growth and fiscal consolidation will help to reduce the current account deficit in the medium term. Executive Directors endorsed the authorities’ structural reform agenda, emphasizing that steadfast implementation is critical to the success of the economic program; developments in the banking sector have exposed shortcomings in the bank resolution framework and the central bank’s de facto lack of supervisory independence.
International Monetary Fund. Middle East and Central Asia Dept.
The outbreak of the COVID-19 pandemic has weakened the macroeconomic outlook. The authorities have launched a health care contingency plan and an initial package of economic measures, together totaling $31 million (0.4 percent of GDP), and are preparing a second, larger package of economic measures of about $400 million (5.2 percent of GDP). To help address an urgent balance of payments need arising from the pandemic, estimated at about $500 million, the authorities request an additional purchase under the Rapid Financing Instrument (RFI) of 33.3 percent of quota (SDR 59.2 million) and a disbursement under the Rapid Credit Facility (RCF) of 16.7 percent of quota (SDR 29.6 million) under the “exogenous shock” window of the RCF. This follows Board approval on March 26, 2020 of the authorities’ earlier request for the same amounts, before the doubling of the annual access on emergency financing under the “exogenous shock” window of the Rapid Credit Facility (RCF) to 100 percent of quota was approved on April 6, 2020. This additional request will bring the total purchases under the RFI and the disbursements under the RCF to 100 percent of quota in 2020.
International Monetary Fund. Middle East and Central Asia Dept.
The economy is growing steadily, benefiting from a benign regional environment, particularly in Russia, the source of most remittances and non-gold export receipts. Low inflation, lower fiscal deficits, and a stable banking sector point to the success of stabilization policies implemented by the government and National Bank of the Kyrgyz Republic (NBKR, the central bank) under eight successive Fund-supported programs. However, the economy remains vulnerable to external shocks because of the high level of remittances (29 percent of GDP), the concentration of exports on gold (37 percent of exports of goods), the level and composition of the public debt (56 percent of GDP, 4/5 of which is denominated in foreign currency), and the level of the current account deficit (8.7 percent of GDP). In addition, economic growth has been insufficient to significantly raise living standards and continue to reduce poverty.