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Middle East and Central Asia > Kyrgyz Republic

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Cover IMF Working Papers
Remittances and Social Safety Nets During COVID-19: Evidence From Georgia and the Kyrgyz Republic
Nordine Abidi
,
Mehdi Akhbari
,
Bashar Hlayhel
, and
Sahra Sakha
Remittance flows in emerging market and developing economies were surprisingly resilient during the COVID-19 crisis, providing much-needed income support for remittance-receiving households. However, households were impacted differently across income distributions. Using novel high-frequency household panel data for Georgia and the Kyrgyz Republic and a difference-in-differences approach, we find that as household income fell during the pandemic, remittance-receiving households were more affected than non-remittance-receiving households. Importantly, we find that the incomes of poor, remittance-receiving households in the Kyrgyz Republic were more adversely affected than their non-remittance-receiving counterparts. In contrast, in Georgia, affluent remittance-receiving households experienced more significant income declines than poor remittance-receiving households. This heterogeneous impact can largely be explained by variations in the effectiveness of social safety nets in the two countries. Our results have important policy implications. Although remittances remained resilient during the pandemic, they affected households differently. As such, policymakers should prioritize addressing gaps in social safety nets to support the most vulnerable.
Keywords:
COVID-19; Remittances; Central Asia; remittance-receiving household; household income; remittance flow; households in Georgia; remittance-sending country; remittance receiver; Income; Social assistance spending; Income distribution; North America; Middle East and Central Asia; Global
Cover IMF Working Papers
The Impact of International Migration on Inclusive Growth: A Review
Zsoka Koczan
,
Magali Pinat
, and
Mr. Dmitriy L Rozhkov
International migration is an important channel of material improvement for individuals and their offspring. The movement of people across country borders, especially from less developed to richer countries, has a substantial impact in several dimensions. First, it affects the migrants themselves by allowing them to achieve higher income as a result of their higher productivity in the destination country. It also increases the expected income for their offspring. Second, it affects the destination country through the impact on labor markets, productivity, innovation, demographic structure, fiscal balance, and criminality. Third, it can have a significant impact on the countries of origin. It may lead to loss of human capital, but it also creates a flow of remittances and increases international connections in the form of trade, FDI, and technological transfers. This paper surveys our understanding of how migration affects growth and inequality through the impact on migrants themselves as well as on the destination and origin countries.
Keywords:
International Migration; Inequality; Economic growth; complementarity effect; consequences of migration; E. country case; origin country; wage effect; Migration; Remittances; Labor markets; Wages; Income; Global; Eastern Europe; costs of emigration; impact of migration; wage effect of migration
Cover Regional Economic Outlook, October 2020, Middle East and Central Asia
Regional Economic Outlook, October 2020, Middle East and Central Asia
International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region and those in the Caucasus and Central Asia (CCA) responded to the COVID-19 pandemic with swift and stringent measures to mitigate its spread and impact but continue to face an uncertain and difficult environment. Oil exporters were particularly hard hit by a “double-whammy” of the economic impact of lockdowns and the resulting sharp decline in oil demand and prices. Containing the health crisis, cushioning income losses, and expanding social spending remain immediate priorities. However, governments must also begin to lay the groundwork for recovery and rebuilding stronger, including by addressing legacies from the crisis and strengthening inclusion.

Keywords:
public health; reopening; rebuilding; oil revenue; OPEC+; REO; oil exporter; MCD country; oil importer; IMF staff calculation; MCD firm; MCD region
Cover IMF Working Papers
Impact of Remittances on Natural Rate of Dollarization—Trends in Caucasus and Central Asia
Rocio Gondo
,
Altynai Aidarova
, and
Mr. Manmohan Singh
This paper discusses migration and remittances trends, and calculates the natural (or benchmark) level of dollarization in Caucasus, Central Asia and others in the region. This natural level of dollarization is conceptually linked to the currency allocation in a portfolio of deposits to maximize welfare, in line with Ize and Levy Yeyati (2003). The fall in remittances due to the economic slowdown since the spread of COVID-19 affects the macroeconomic fundamentals that determine demand for foreign currency deposits. We calculate the natural dollarization level by integrating structural macroeconomic characteristics. We show that despite the reduction in deposit dollarization, there is still a gap with respect to the natural level of dollarization, especially in a scenario of (persistent) lower remittance inflows.
Keywords:
WP; remittance; deposit dollarization; natural rate of dollarization; Russia; COVID; remittances; Central Asia; Caucasus; remittance inflow; dollarization policy; benchmark dollarization; dollarization level; exchange rate depreciation; Dollarization; Exchange rates; Currencies; Income; Global; Central Asia and the Caucasus; loan dollarization rate; Migration
Cover IMF Working Papers
Remittances in Russia and Caucasus and Central Asia: the Gravity Model
Mr. Tigran Poghosyan
Remitances are an important source of external financing in low- and middle-income countries. This paper uses the gravity model to analyze remittance flows in Russia and Caucasus and Central Asia (CCA) countries. Standard gravity determinants, such as GDP in sending and recieiving countries, bilateral distance, existence of common borders and common official language, fit remittance flows well. Remittances also react to inflation and exchange rate movements in recipient countries to sustain their purchasing power. In line with the altruism hypothesis, remittances flow to countries with higher age dependency ratio. Remittances are countercyclical and help stabilize outputs in recipient countries. However, global shocks resulting in sharp output losses of sending countries would lead to large volatility and decline of remittance inflows in recipient countries. The results of the analysis can be used to assess the impact of the COVID-19 shock on projected remittance flows into CCA.
Keywords:
WP; remittance; country; remittance flow; international remittances; migration; gravity model; recipient country; country j; bilateral remittance; pair level; sending country; Remittances; Gravity models; Oil prices; Exchange rates; Outward remittances; Central Asia and the Caucasus; Global
Cover IMF Working Papers
Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States?
Samy Ben Naceur
,
Mr. Ralph Chami
, and
Mohamed Trabelsi
This paper explores the relationship between remittances and financial inclusion for a sample of 187 countries over the period 2004-2015, using cross-country as well as dynamic panel GMM regressions. At low levels of remittances-to-GDP, these flows act as a substitute to formal financial channels, thereby reducing financial inclusion. In contrast, when remittance-to-GDP ratio is high, above 13% on average, they tend to complement formal access and usage channels, thus enhancing financial inclusion. This “U shaped” relationship highlights the role of remittance flows in financing household consumption at low levels, while raising formal household bank savings and allowing for more intermediation, at high levels of remittance-to-GDP.
Keywords:
WP; remittance inflow; Remittances; Financial inclusion; Financial Stability; Financial Development; remittance flow; squared remittance; effect of remittance; inflows to GDP; GMM estimator; Commercial banks; Financial sector development; East Asia; South Asia; Asia and Pacific; banking sector matter; income level
Cover Spillover Notes
The Spillover Effects of Russia’s Economic Slowdown on Neighboring Countries
Ara Stepanyan
,
Agustin Roitman
,
Gohar Minasyan
,
Ms. Dragana Ostojic
, and
Mr. Natan P. Epstein
In the face of sharply lower oil prices and geopolitical tensions and sanctions, economic activity in Russia decelerated in late 2014, resulting in negative spillovers on Commonwealth of Independent States (CIS) and, to a lesser extent, on Baltic countries. The spillovers to eastern Europe have been limited. The degree of impact is commensurate with the level of these countries’ trade, remittances, and foreign direct investment (FDI) links with Russia. So far, policy action by the affected countries has focused on mitigating the immediate consequences of spillovers.
Keywords:
SN; Russia; exchange rate; CIS country; CIS oil importer; growth slowdown; import ban; exchange rate depreciation; growth shock; Spillovers; Oil prices; Exchange rates; Depreciation; Remittances; Baltics; Eastern Europe
Cover IMF Staff Country Reports
Kyrgyz Republic: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
Kyrgyz Republic: Selected Issues
Keywords:
ISCR; CR; Kyrgyzstan; remittance; loan; Kyrgyz VAT rate; VAT collection; remittances inflow; wage bill; accrual reporting; Credit; Loans; Remittances; Income inequality; Corporate income tax; Global; Central and Eastern Europe; Central Asia and the Caucasus; Central Asia
Cover Regional Economic Outlook, October 2011, Middle East and Central Asia
Regional Economic Outlook, October 2011, Middle East and Central Asia
International Monetary Fund. Middle East and Central Asia Dept.

Abstract

The Arab Spring holds the promise of improved living standards and a more prosperous future for the peoples of the Middle East and North Africa region. At the same time, the region is witnessing uncertainty and economic pressures from domestic and external sources, which will likely be exacerbated by the recent worsening of the global economy. The main challenge in the short term will be to manage expectations while maintaining economic stability. To that end, better-targeted subsidies and transfers will help free up resources for investment in infrastructure, education, and health. Policies aimed at fostering inclusive growth will also help cement the longer-term benefits of the ongoing changes in the region. In the Caucasus and Central Asia, the economic outlook is broadly positive. Exports and remittances--key growth drivers in 2010--are continuing to grow solidly, helping the recovery gain firm momentum. At the same time, uncertainties over the robustness of the global recovery constitute a downside risk to the growth outlook. Key challenges facing the region over the medium term are to create jobs and foster high and inclusive growth.

Keywords:
REO; oil importer; IMF staff calculation; country; importer; oil exporter; MENAP country; CCA country; Oil; Inflation; Unemployment; Oil prices; Fuel prices; Global; Europe; Maghreb; Middle East and Central Asia; Middle East; North Africa; GCC country; commodity metals price; Remittances
Cover IMF Working Papers
How Russia Affects the Neighborhood - Trade, Financial, and Remittance Channels
Jaime Espinosa-Bowen
,
Mr. Nadeem Ilahi
, and
Fahad Alturki
We test the extent to which growth in the 11 CIS countries (excluding Russia) was associated with developments in Russia, overall, as well as through the trade, financial and remittance channels over the last decade or so. The results point to the continued existence of economic links between the CIS countries and Russia, though these links may have altered since the 1998 crisis. Russia appears to influence regional growth mainly through the remittance channel and somewhat less so through the financial channel. There is a shrinking role of the trade (exports to Russia) channel. Russian growth shocks are associated with sizable effects on Belarus, Kazakhstan, Kyrgyz Republic, Tajikistan, and, to some extent, Georgia.
Keywords:
WP; CIS country; Russia; country; CIS GDP; CIS growth variation; CIS countries' export; remittance channel; remittances from Russia; Remittances; Real effective exchange rates; Current account balance; Oil prices; Current account; Europe; Global