IMF Survey: IMF to Step Up Its Engagement, Support in Central Asia
June 22, 2009
- Support aims to raise region's growth potential, help vulnerable groups
- Stronger cooperation to restore confidence in banking systems
- Governments urged to rebuild social safety nets
Managing Director Dominique Strauss-Kahn assured the countries of Central Asia that the IMF stands ready to help manage the effects of the global financial crisis and step up its engagement and support in the region.
ECONOMIC CRISIS AND CENTRAL ASIA
Speaking with the authorities and members of the public in Kazakhstan, Tajikistan, the Kyrgyz Republic, and the Republic of Uzbekistan, Strauss-Kahn said the Fund is committed to provide continuing technical assistance and financial support to raise the region’s growth potential and help the poorest and most vulnerable groups of the population.
“We are asking governments to rebuild social safety nets to take into account the needs of the poor and most vulnerable groups of the population. We are introducing what I call social conditionality,” said Strauss-Kahn in a public lecture at the Government Academy in Kazakhstan, the first country of his five-day visit to the region.
Sounder banking systems
Growth in Central Asia is expected to drop to only around 1 percent this year, from almost double-digit rates on average during 2005–07, the IMF forecast in its Regional Economic Outlook released in May. The region’s limited exposure to global financial linkages has largely insulated it from the direct impact of the global financial turmoil, with the exception of Kazakhstan, which has a large share of private external financing in the banking sector and is facing difficulties meeting its external debt rollover needs.
In his discussions with the Kazakh authorities, Strauss-Kahn offered to provide IMF technical assistance to support restructuring plans to strengthen banks and restore confidence in the system. “I share the view of the Prime Minister that putting the banking system on a sounder and more sustainable footing will require more reliance on domestic deposits rather than on external financing,” said Strauss-Kahn at the conclusion of his visit to Kazakhstan.
Support to alleviate poverty
In Tajikistan, Strauss-Kahn visited the village of Shainaki Chinor in Rudaki Rayon, where he discussed with migrant workers and nongovernmental organization representatives the impact of the global crisis on the people of Tajikistan though declining remittances and returning migrants.
Over the past decade, Tajikistan and the Kyrgyz Republic have become increasingly reliant on money sent home from citizens working abroad. In 2008, remittances accounted for 47 percent of Tajikistan’s GDP, with most Tajik migrants reportedly working in Russia. With less work available for migrant workers in host countries, some of them are returning to their home countries, contributing to additional pressure on social spending.
Strauss-Kahn (second right) during visit to Shainaki Chinor, Tajikistan, June 16 during five-day Central Asian tour (photo: IMF)