Abstract
The economy has shown some resilience in the face of adverse regional shocks but potential growth is constrained by persistent structural challenges, particularly lagging productivity and dependence on gold, remittances, and foreign aid. Satisfactory performance under the program during the first half of the year was followed by fiscal slippages in the run-up to the October elections and a delay in adopting the Banking Code, a key measure to strengthen central bank independence and the bank resolution framework. The combined impact of a large public investment program and currency depreciation has raised the public debt ratio markedly. Significant further depreciation could pose risks for the otherwise well capitalized, but highly dollarized, financial sector. The business environment remains weak, overshadowed by lingering disagreements between the authorities and the largest foreign investor.
On December 4, 2015, the Executive Board of the International Monetary Fund (IMF) completed the first review of the Kyrgyz Republic’s economic performance under the three-year arrangement under the Extended Credit Facility (ECF). The Board’s approval enables the immediate disbursement of SDR 9.5 million (about US$13.2 million). This would bring total disbursements under the arrangement to SDR 19 million (about US$26.4 million). The extended arrangement for SDR 66.6 million (then about US$92.4 million) was approved on April 8, 2015 (see
Following the Executive Board discussion Mr. Min Zhu, Deputy Managing Director and Acting Chair, made the following statement:
“The Kyrgyz authorities have managed successfully to keep the program largely on track despite that the economy continues to face adverse external and domestic shocks. The economic slowdown, currency depreciations in the region, and falling gold prices and remittances have reduced economic growth, worsened external and fiscal balances, and weakened debt sustainability. Budgetary slippages linked to the October elections have also weakened the fiscal situation.
“The authorities’ commitment to resume fiscal consolidation starting in 2016 is welcome, and will help rebuild buffers and keep debt on a sustainable path. Tax revenues are expected to increase supported by a set of new measures aimed at expanding the tax base and strengthening tax administration. Current expenditures should decline as spending on goods and services and other nonpriority outlays will be streamlined. Additionally, the public investment program will be rephased and prioritized.
“Monetary policy will remain on a tightening bias to contain inflation pressures. The central bank will also continue to pursue a flexible exchange rate policy to safeguard foreign exchange reserves and preserve competitiveness, with interventions limited to smoothing short-term fluctuations.
“Maintaining a healthy banking sector is critical in the current environment. Banking supervision will be strengthened, and the banking law needs to be enacted as a matter of priority to strengthen the independence of the central bank and ensure a robust bank resolution mechanism.”
Kyrgyz Republic: Selected Social and Economic Indicators, 2014–20
General government comprises State Government and Social Fund finances. State government comprises central and local governments.
Calculated at end-period exchange rates.
Kyrgyz Republic: Selected Social and Economic Indicators, 2014–20
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|---|---|
| Act. | Projections | ||||||
| Nominal GDP (in billions of soms) | 397.3 | 434.2 | 487.3 | 537.3 | 600.6 | 662.9 | 730.8 |
| Real GDP (growth in percent) | 3.6 | 2.4 | 3.6 | 3.1 | 5.3 | 5.2 | 6.0 |
| Nongold real GDP (growth in percent) | 4.6 | 3.4 | 3.2 | 4.0 | 4.5 | 5.0 | 5.5 |
| Consumer prices (12-month percent change, eop) | 10.5 | 7.6 | 7.0 | 6.5 | 5.9 | 5.4 | 5.1 |
| Consumer prices (12-month percent change, average) | 7.5 | 7.4 | 8.9 | 6.9 | 6.1 | 5.7 | 5.3 |
| General government finances (in percent of GDP) 1/ | |||||||
| Revenue | 35.9 | 37.4 | 35.7 | 35.4 | 35.3 | 35.5 | 35.3 |
| Of which: Tax revenue | 20.8 | 20.0 | 22.0 | 22.3 | 22.5 | 22.7 | 22.9 |
| Expense | 30.3 | 31.4 | 29.8 | 28.3 | 27.1 | 26.6 | 26.3 |
| Gross operating balance | 5.6 | 5.9 | 5.9 | 7.1 | 8.2 | 8.8 | 9.0 |
| Net acquisition of nonfinancial assets | 5.8 | 9.5 | 10.4 | 8.4 | 6.7 | 7.4 | 7.7 |
| Overall balance(net lending/borrowing) | −0.2 | −3.5 | −4.5 | −1.3 | 1.5 | 1.4 | 1.3 |
| Overall balance including onlending | −3.9 | −5.4 | −9.1 | −4.1 | −1.1 | 0.6 | 1.3 |
| Total public debt 2/ | 53.0 | 64.9 | 66.9 | 67.6 | 66.1 | 64.9 | 63.8 |
| Banking sector | |||||||
| Reserve money (percent change, eop) | −11.9 | 7.2 | 7.9 | 7.7 | 6.7 | 6.6 | 6.3 |
| Broad money (percent change, eop) | 3.0 | 11.0 | 13.3 | 12.8 | 12.5 | 11.9 | 11.7 |
| Credit to private sector (percent change, eop) | 43.6 | 18.5 | 17.2 | 14.0 | 15.2 | 13.8 | 11.9 |
| Credit to private sector (in percent of GDP) | 20.7 | 22.4 | 23.4 | 24.2 | 25.0 | 25.7 | 26.1 |
| External sector | |||||||
| Current account balance (in percent of GDP) | −16.8 | −16.0 | −17.3 | −14.9 | −14.1 | −13.1 | −11.4 |
| Export growth (percent change) | −13.5 | −15.8 | 5.8 | 2.7 | 7.3 | 7.3 | 9.5 |
| Import growth (percent change) | −3.0 | −18.8 | 8.2 | 4.9 | 6.7 | 2.7 | 4.0 |
| Gross International reserves (in millions of U.S. dollars) | 1,85 6 | 1,77 0 | 1,58 6 | 1,77 6 | 1,88 7 | 2,04 4 | 2,38 3 |
| Gross reserves (months of next year imports, eop) | 4.2 | 3.7 | 3.2 | 3.3 | 3.4 | 3.6 | 4.0 |
| External public debt outstanding (in percent of GDP) | 51.0 | 63.0 | 65.3 | 66.1 | 64.7 | 63.6 | 62.7 |
General government comprises State Government and Social Fund finances. State government comprises central and local governments.
Calculated at end-period exchange rates.
Kyrgyz Republic: Selected Social and Economic Indicators, 2014–20
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|---|---|
| Act. | Projections | ||||||
| Nominal GDP (in billions of soms) | 397.3 | 434.2 | 487.3 | 537.3 | 600.6 | 662.9 | 730.8 |
| Real GDP (growth in percent) | 3.6 | 2.4 | 3.6 | 3.1 | 5.3 | 5.2 | 6.0 |
| Nongold real GDP (growth in percent) | 4.6 | 3.4 | 3.2 | 4.0 | 4.5 | 5.0 | 5.5 |
| Consumer prices (12-month percent change, eop) | 10.5 | 7.6 | 7.0 | 6.5 | 5.9 | 5.4 | 5.1 |
| Consumer prices (12-month percent change, average) | 7.5 | 7.4 | 8.9 | 6.9 | 6.1 | 5.7 | 5.3 |
| General government finances (in percent of GDP) 1/ | |||||||
| Revenue | 35.9 | 37.4 | 35.7 | 35.4 | 35.3 | 35.5 | 35.3 |
| Of which: Tax revenue | 20.8 | 20.0 | 22.0 | 22.3 | 22.5 | 22.7 | 22.9 |
| Expense | 30.3 | 31.4 | 29.8 | 28.3 | 27.1 | 26.6 | 26.3 |
| Gross operating balance | 5.6 | 5.9 | 5.9 | 7.1 | 8.2 | 8.8 | 9.0 |
| Net acquisition of nonfinancial assets | 5.8 | 9.5 | 10.4 | 8.4 | 6.7 | 7.4 | 7.7 |
| Overall balance(net lending/borrowing) | −0.2 | −3.5 | −4.5 | −1.3 | 1.5 | 1.4 | 1.3 |
| Overall balance including onlending | −3.9 | −5.4 | −9.1 | −4.1 | −1.1 | 0.6 | 1.3 |
| Total public debt 2/ | 53.0 | 64.9 | 66.9 | 67.6 | 66.1 | 64.9 | 63.8 |
| Banking sector | |||||||
| Reserve money (percent change, eop) | −11.9 | 7.2 | 7.9 | 7.7 | 6.7 | 6.6 | 6.3 |
| Broad money (percent change, eop) | 3.0 | 11.0 | 13.3 | 12.8 | 12.5 | 11.9 | 11.7 |
| Credit to private sector (percent change, eop) | 43.6 | 18.5 | 17.2 | 14.0 | 15.2 | 13.8 | 11.9 |
| Credit to private sector (in percent of GDP) | 20.7 | 22.4 | 23.4 | 24.2 | 25.0 | 25.7 | 26.1 |
| External sector | |||||||
| Current account balance (in percent of GDP) | −16.8 | −16.0 | −17.3 | −14.9 | −14.1 | −13.1 | −11.4 |
| Export growth (percent change) | −13.5 | −15.8 | 5.8 | 2.7 | 7.3 | 7.3 | 9.5 |
| Import growth (percent change) | −3.0 | −18.8 | 8.2 | 4.9 | 6.7 | 2.7 | 4.0 |
| Gross International reserves (in millions of U.S. dollars) | 1,85 6 | 1,77 0 | 1,58 6 | 1,77 6 | 1,88 7 | 2,04 4 | 2,38 3 |
| Gross reserves (months of next year imports, eop) | 4.2 | 3.7 | 3.2 | 3.3 | 3.4 | 3.6 | 4.0 |
| External public debt outstanding (in percent of GDP) | 51.0 | 63.0 | 65.3 | 66.1 | 64.7 | 63.6 | 62.7 |
General government comprises State Government and Social Fund finances. State government comprises central and local governments.
Calculated at end-period exchange rates.