IMF Completes Fourth Review Under an ECF Arrangement with the Kyrgyz Republic, Approves US$14.4 Million Disbursement, and Completes Article IV ConsultationPress Release No. 13/207
June 10, 2013
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Kyrgyz Republic’s economic performance under the program supported by a three-year, SDR 66.6 million (about US$100.8 million) Extended Credit Facility arrangement that was approved by the IMF’s Executive Board on June 20, 2011 (see Press Release No. 11/245). The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 9.5 million (about US$14.4 million) to the Kyrgyz Republic. This would bring total disbursements under the arrangement to SDR 47.57 million (about US$72 million).
In completing the review, the Board approved the authorities’ request for a waiver of nonobservance of the continuous quantitative performance criteria on contracting or guaranteeing of new nonconcessional external debt by the public sector. The request for the waiver was approved based on the corrective actions taken by the authorities.
The Executive Board also concluded the 2013 Article IV Consultation with the Republic of Kyrgyzstan. Under the Article IV of its Articles of Agreement, the IMF has a mandate to exercise surveillance over the economic, financial, and exchange rate policies of its members in order to ensure the effective operation of the international monetary system. A Public Information Notice on the Board’s assessment of the Consultation will be released separately.
Following the Executive Board's discussion, Mr. Min Zhu, Deputy Managing Director and Acting Chair, stated:
“The Kyrgyz authorities have made good progress under their ECF-supported program. The fiscal targets were met despite a temporary slowdown in growth. The economy is recovering, and the medium-term outlook is favorable. Steadfast implementation of the program will be important to consolidate the gains and guard against downside risks.
“Fiscal consolidation is a priority in the medium term to reduce vulnerabilities, rebuild policy buffers, and ensure sustainability. The authorities’ consolidation plans appropriately focus on restraining current spending while preserving social and capital outlays. Reforms in tax policy and administration and public financial management should continue.
“Maintaining a tight monetary policy stance is necessary to mitigate underlying inflationary pressures. Stronger de facto independence will help the central bank to maintain low inflation.
“Creating a well-functioning financial sector is key to supporting private sector-led growth. The new banking code, once approved, will help restore confidence in the banking system. The resolution of Zalkar Bank was an important step, and its operations will need to be closely supervised to ensure compliance with prudential standards.
“Diversification of the economy will help reduce volatility in growth stemming from disruptions in gold production. Good governance and sound institutions remain critical to create a level playing field, improve investor confidence, and lay the foundation for strong private sector-led growth.”