Press Release: IMF and the National Bank of the Republic of Kazakhstan Regional Conference on Managing Strong Foreign Exchange Inflows in the Southern Caucasus and Central Asian Countries
April 25, 2007
The Regional Conference "Managing Strong Foreign Exchange Inflows in the Southern Caucasus and Central Asian Countries" was held in Almaty on April 25, 2007.
The conference was organized by the International Monetary Fund and the National Bank of the Republic of Kazakhstan.
Participants in the conference included senior officials of the International Monetary Fund, the national (central) banks and governments of the countries of the Southern Caucasus, Central Asia, Switzerland, Pakistan, international financial institutions (World Bank, Asian Development Bank, Eurasian Development Bank), the Government of the Republic of Kazakhstan, Financial Supervision Agency of the Republic of Kazakhstan, and the Association of Financial Institutions of the Republic of Kazakhstan.
At the opening sessions of the conference welcoming remarks were made by Karim Massimov, Prime Minister of the Republic of Kazakhstan, and Mohsin S. Khan, Director of the IMF's Middle East and Central Asia Department.
The participants in the conference had an active discussion of the most urgent issues regarding strategies and economic policies to manage strong foreign exchange inflows.
During the conference at the session devoted to the overview of the experience of the countries of the region in regard to large foreign exchange inflows, David Owen, Senior Advisor of the IMF's Middle East and Central Asia Department, described the pattern and scale of foreign exchange inflows to the region in recent years, the authorities' policy responses and the consequences. Special attention was given to inflation, the exchange rate and economic growth.
At the session devoted to policy responses to external inflows and the experience of countries outside the region John Wakeman-Linn, IMF Mission Chief for Georgia, and Willy Kiekens, IMF Executive Director representing Kazakhstan, talked about the problems central banks faced at the time of sustained foreign exchange inflows, their experience in conducting monetary and exchange policies, and about reducing the risks related to foreign exchange inflows.
During the conference at the session "Example of an Oil-Producing Country (Case Study: Kazakhstan)" a presentation was made by Aasim Husain, IMF Mission Chief for Kazakhstan. Mr. Husain presented a review of foreign exchange inflows in Kazakhstan, as well as conclusions in regard to the near-term policy measures, the quality of those and their impact on the economy of Kazakhstan. Presentations were also made by Anvar Saidenov, Governor of the National Bank of Kazakhstan, and Emin Huseynov, Director of the Research and Statistics Department of the National Bank of Azerbaijan. Anvar Saidenov spoke about the impact of foreign exchange inflows on the exchange rate and inflation, as well as about the factors influencing capital inflows. Measures that are being taken by NBK in that respect were described. Also mentioned in the presentation was the role of the liberalization of Kazakhstan's economy, and new tasks related to capital flows.
Also, at the session "Coping With Strong Remittances (Case Study: Armenia)" presentations were made by Nienke Oomes, IMF Resident Representative in Armenia, Tigran Sargsyan, Governor of the Central Bank of Armenia, and Abdybaly tegin Suerkul, Deputy Governor of the National Bank of the Kyrgyz Republic.
It was emphasized at the conference that inflows in the form of significant export receipts, foreign direct investment and remittances are nourished by high energy prices and by a favorable situation in the global financial markets. These have resulted in excessive liquidity, inflation growth, and pressures towards the strengthening of the exchange rate, complicating the conduct of monetary and exchange rate policies.
In general, the participants in the conference described their own experiences and gave a positive assessment of the development of the region over the medium-term, and emphasized the appropriateness of the policies of the countries in the region in dealing with foreign exchange inflows.