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IMF Executive Board Completes the Fourth and Fifth Reviews Under the Extended Credit Facility Arrangement for the Kyrgyz Republic

Author(s):
International Monetary Fund. Middle East and Central Asia Dept.
Published Date:
February 2018
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On December 15, 2017, the Executive Board of the International Monetary Fund (IMF) completed the fourth and fifth reviews of the Kyrgyz Republic’s economic performance under the three-year Extended Credit Facility (ECF) arrangement. The Board’s completion of the reviews enables the immediate disbursement of an amount equivalent to SDR 19.028 million (about US$26.9 million). This would bring total disbursements under the arrangement to an amount equivalent to SDR 57.084 million (about US$80.7 million). The ECF arrangement for SDR 66.6 million (about US$94.2 million) was approved on April 8, 2015 (see Press Release No. 15/165).

Following the Executive Board discussion Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:

“The Kyrgyz economy is showing welcoming signs of recovery as the external environment is gradually improving. While significant risks remain, debt and financial sector vulnerabilities have subsided. The authorities are committed to prudent macroeconomic policies and implementation of structural reforms, and see them as essential to promoting higher and more inclusive growth and to increase economic resiliency.

“Fiscal consolidation remains essential to rebuild buffers and ensure debt sustainability. Consolidation should focus on increasing tax revenues by implementing permanent measures, such as broadening the tax base and strengthening the tax and custom administration. Rationalizing expenditures will also be needed, and involves reforming public wages, cutting subsidies, better targeting social benefits, and improving the public investment framework.

“Monetary policy remains appropriately focused on maintaining price stability. The National Bank of the Kyrgyz Republic (NBKR) should continue to pursue a two-way flexible exchange rate policy, and limit interventions only to smoothing the excessive volatility of the som. The envisaged transition to inflation targeting is welcome.

“To ensure a level playing field, the NBKR should refrain from taking equity positions in banks or investment entities. Further progress is needed in amending the Banking Law to strengthen NBKR independence and governance.

“The authorities are encouraged to swiftly resume their structural reform agenda, especially in public finance management to enhance public sector efficiency. Improving the business environment and fighting corruption will be essential to promote private sector-led growth.

“While the program is facing important domestic and external risks, including a slower regional recovery, reform slippages, and worsening of corresponding banking channels, the authorities remain firmly committed to implement the program and pursue policies to ensure a return to higher and more inclusive growth on a sustained basis.”

Kyrgyz Republic: Selected Social and Economic Indicators, 2016–22
2016201720182019202020212022
Est.Projections
Nominal GDP (in billions of soms)458.0488.7523.6570.5619.2668.3727.2
Real GDP (growth in percent)3.83.23.34.94.64.04.8
Nongold real GDP (growth in percent)3.73.33.84.04.24.34.4
Consumer prices (12-month percent change, eop)−0.53.25.55.25.15.05.0
Consumer prices (12-month percent change, average)0.43.14.25.05.05.05.0
General government finances (in percent of GDP) 1/
Revenue34.738.535.133.433.334.134.0
Of which: Tax revenue20.321.721.922.122.222.422.6
Expense31.331.529.528.928.728.428.0
Gross operating balance3.47.05.64.54.65.75.9
Net acquisition of nonfinancial assets8.010.58.17.06.97.87.9
Overall balance (net lending/borrowing)−4.6−3.5−2.5−2.5−2.3−2.1−1.9
Overall balance including onlending−6.9−5.9−4.0−5.3−3.2−2.6−2.4
Total public debt 2/58.157.158.258.456.255.053.2
Banking sector
Reserve money (percent change, eop)27.619.49.110.59.78.58.0
Broad money (percent change, eop)14.616.513.212.211.49.49.3
Credit to private sector (percent change, eop)−1.015.214.710.610.49.39.9
Credit to private sector (in percent of GDP)20.822.524.124.524.925.225.5
External sector
Current account balance (in percent of GDP)−12.1−10.0−13.1−12.2−11.6−11.1−10.6
Export growth (percent change)−0.910.46.214.410.87.611.4
Import growth (percent change)−2.312.111.59.77.77.17.0
Gross International reserves (in millions of U.S. dollars)1,7771,8861,8482,0822,3542,6132,861
Gross reserves (months of next year imports, eop)4.03.83.43.53.73.94.0
External public debt outstanding (in percent of GDP)56.654.555.856.154.153.151.5
Sources: Kyrgyz authorities and IMF staff estimates and projections.

General government comprises State Government and Social Fund finances. State government comprises central and local governments.

Calculated at end-period exchange rates.

Sources: Kyrgyz authorities and IMF staff estimates and projections.

General government comprises State Government and Social Fund finances. State government comprises central and local governments.

Calculated at end-period exchange rates.

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