## 1kgzea2020001 - EXECUTIVE SUMMARY ## Source details **Canonical URL:** [1kgzea2020001 - EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/cr/2020/english/1kgzea2020001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2020/english/1kgzea2020001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2020/english/1kgzea2020001.pdf.json) --- ### Context - Outbreak of the COVID-19 pandemic opened a balance of payments gap estimated at about $400 million; authorities requested a purchase under the Rapid Financing Instrument (RFI) and a disbursement under the Rapid Credit Facility (RCF) under the “exogenous shock” window of the RCF. - Fund emergency support aims to provide a backstop, increase buffers, shore up confidence, catalyze donor support, and preserve fiscal space for essential COVID-19-related health expenditure. - Authorities are working on processes to ensure the quality of COVID-19 related spending. ### Recent economic developments (2019–early 2020) - Real GDP growth: 4.5 percent in 2019 (pickup in both gold and non-gold output). - Output gap closed; headline and core inflation remained below the 5–7 percent target range. - Current account deficit: 9.2 percent of GDP in 2019 (from 12.1 percent in 2018). - Gross official reserves stabilized at 4.7 months of imports of goods and services. - General government budget deficit: 0.1 percent of GDP in 2019. - Public debt: 54 percent of GDP in 2019. - Banking sector indicators (January 2020): average capital adequacy ratio 22 percent; liquid assets to liabilities 69 percent (minimum required 45 percent); NPL ratio 8.1 percent. - Indirect foreign exchange risk: unhedged borrowers with revenue in KGS but debt in US$ comprise about 25 percent of total loans and two thirds of foreign exchange loans. - Early 2020 COVID-19: 42 confirmed cases. - Border closure with China (36 percent of goods imports originate from China) led to declines in imports from China by 27 percent and border tax revenue by about 20 percent compared to the same period last year. - Remittances fell by 15 percent compared to the same period last year (fall in oil prices). - Headline inflation: 4.1 percent year-on-year in February 2020 owing to food prices. - NBKR foreign exchange sales: $202 million so far in 2020 (40 percent more than total FX interventions for the whole year of 2019). - KGS depreciation: 20 percent vis-a-vis the US$ since the beginning of the year. - NBKR policy interest rate: raised by 75 basis points to 5 percent in February 2020. ### Impact of the shock (baseline assumptions) - Assumes COVID-19 impact lasts for the first half of 2020 due to confidence effects, containment and mitigation efforts, and supply disruptions; fall in international oil prices will depress remittances via Russia. - Projections for 2020 (selected): - Real GDP (nongold) growth: 0.4 (2020) - Headline inflation (12-month percent change, average): 12.0 (2020) - Current account balance: -14.5 (2020) - General government fiscal deficit (overall balance, percent of GDP): -7.8 (2020) - Public debt (total public debt, percent of GDP): 65.9 (2020) - Gross international reserves: 1,950 (2020) (millions of U.S. dollars) - Gross reserves (months of next year imports, eop): 4.4 (2020) - Credit to private sector (percent change, eop): 6.1 (2020) - External financing gap / Balance of Payments Financing, 2020 (millions of U.S. dollars): - Financing Gap: 405.6 (2020) - Identified budget support: 128.6 (2020) - World Bank: 5.0 (2020) - IMF RFI/RCF disbursement: 123.6 (2020) — assumed blend equal to 50 percent of quota - Unidentified budget support: 277.0 (2020) - Without IMF and donor support, reserves could fall to 3.5 months of imports in 2020 or exchange rate could fall in a destabilizing manner; under a more adverse scenario reserve coverage could fall to 3 months. ### Adverse scenario (12-month shock) - If disruptions last 12 months rather than 6 months: - Real GDP could contract by 3 percent in 2020. - Inflation could increase to 15 percent. - Current account deficit could widen to 17 percent of GDP. - Budget deficit could increase to 10 percent of GDP. - Financing gap in the balance of payments could reach $600 million. - In such a case, a UCT program would likely be needed and authorities are advised to start preparing one immediately. ### Fiscal policy recommendations - Widening fiscal deficit to 7.8 percent of GDP in 2020 is appropriate, provided enough financing is mobilized. - Fiscal loosening should be accommodated in a supplementary budget to prevent the outbreak of COVID-19 and to address the negative output gap. - If donor financing is insufficient, consider expenditure reprioritization in areas that least affect prevention of COVID-19 (examples: reducing tax exemptions or postponing non-priority goods and services or capital expenditures), while protecting expenditure that benefits the poor. - Protect health spending at around budgeted levels: budget includes KGZ 19 billion ($240 million, 3.0 percent of GDP) for the health sector; accommodate additional estimated health expenditure to contain COVID-19 of $9.4 million (0.1 percent of GDP) so far through cuts in non-essential expenditure. - Authorities commit to subject procurement of urgently needed medical supplies to an ex-post audit by the Audit Chamber, with results published on the Ministry of Finance website. ### Monetary and exchange rate policy recommendations - Monetary policy should be data dependent given significant uncertainties. - Recent policy rate hike to 5 percent is in line with the estimated neutral interest rate, but widening output gap could justify easing the policy rate. - Temporary increase in headline inflation owing to exchange rate weakening should be accommodated; monitor second-order effects and adjust stance if risk of sustained broad-based inflation above target range emerges. - NBKR should stand ready to provide liquidity to the financial system and ensure transparent information on eligible collateral. - Exchange rate flexibility is welcome; FX intervention should be limited to addressing disorderly market conditions. Authorities should not resist exchange rate adjustments driven by market reassessment of fundamentals; capital flow measures may be discussed if needed. ### Financial sector policy recommendations - Provide liquidity support to the financial system as needed, ensuring transparent collateral rules. - Use banks’ capital and liquidity buffers to absorb credit losses and liquidity stress; once buffers are exhausted, show flexibility on timing of restoring capital and liquidity above minimum requirements. - Monitor and mitigate indirect foreign exchange risk stemming from unhedged borrowers. ### Access, capacity to repay, modalities and safeguards - Debt distress assessment: moderate. - Capacity to repay the Fund: adequate. - Proposed IMF support: blended RFI/RCF disbursement equal to 50 percent of quota to provide urgent balance of payments support and catalyze donor financing. - Staff estimates: single disbursement around 50 percent of quota (SDR 88.8 million or about US$ 123 million). - With proposed access level: 16.7 percent of quota (SDR 29.6 million) under the RCF and 33.3 percent of quota (SDR 59.2 million) under the RFI. - Memorandum of Understanding between NBKR and Ministry of Finance will: (i) maintain IMF funds in a government account at the central bank pending use, (ii) require the government to hold foreign exchange balances only with the NBKR, and (iii) clarify responsibilities for repaying Fund resources. - NBKR commits to undergo a safeguards assessment and to authorize the central bank’s external auditors to hold discussions with staff. ### Risks and contingency planning - Considerable margin of uncertainty with significant downside risks (see Risk Assessment Matrix). - If crisis is more protracted and intense, a larger balance of payments gap and need for stronger policy adjustment and further financing from development partners would arise. - Authorities advised to prepare for a UCT program to catalyze longer-term donor support if the shock worsens. --- ### Medium-term fiscal plan, debt outlook, and financial sector vulnerabilities ### Medium-term fiscal plan and deficit reduction - Widening of the deficit in 2020 should be embedded in a medium-term fiscal plan that brings the fiscal deficit down to 3 percent of GDP within a few years once the temporary shock has passed and confidence has been restored. - Priority areas for reducing the deficit in the medium term: - Large tax exemptions. - Energy sector subsidies (2.0 percent of GDP). - Tighter management of the wage bill (11.5 percent of GDP in 2019). - Improvements in public financial management. ### Debt outlook and sustainability - Public debt projections: - Public debt expected to increase to 66 percent of GDP in 2020 due to higher fiscal deficit from COVID-19. - If the authorities keep the general government deficit at 3 percent of GDP in the short and medium term and continue to get external financing from donors at concessional terms, total public debt will be maintained at around 60 percent of GDP in the long term. - Standardized stress tests indicate resilience of external and public debt assessments to more severe COVID-19 impacts than assumed. - Debt-carrying capacity: Strong. Composite Indicator (CI) index: 3.19. ### Financial sector vulnerabilities and policy - Banking sector is well capitalized and liquid and should be able to absorb credit losses and a liquidity squeeze if the crisis is short-lived. - Vulnerable sectors: textile, transport, and tourism. - Exchange rate depreciation may adversely affect enterprises with revenue in KGS but debt service in US dollars. - Recommendations: - Continue implementing prudential rules to make crisis impact transparent. - NBKR to agree with banks on plans to restore capital and liquidity above minimums, showing flexibility on timing as needed. - Encourage restructuring of debt for temporarily illiquid but otherwise solvent borrowers. --- ### Staff recommendation, key indicators, and program modalities ### Staff recommendation and risk assessment - Staff supports the proposed purchase under the RFI and disbursement under the RCF. - Risk of debt distress: moderate. - Capacity to repay the Fund: adequate. ### Key macroeconomic indicators and projections (selected series as presented) - Population (in millions, 2017): 6.3 - GINI Index (2017): 27.3 - Unemployment rate (official, percent, 2017): 6.9 - Life expectancy at birth in years (2017): 71.2 - Poverty rate (percent, national definition, 2018): 22.4 - Per capita GDP (2018, U.S. dollars): 1,293 - Under-five mortality (per 1000 live births, 2017): 20 - Nominal GDP (in millions of U.S. dollars): 7,703 8,271 8,455 8,052 8,546 9,026 9,568 10,149 10,768 - Real GDP (growth in percent): 4.7 3.5 4.5 0.4 6.0 4.3 4.0 4.1 4.1 - Consumer prices (12-month percent change, eop): 3.7 0.5 3.1 2.0 7.0 5.0 5.0 5.0 5.0 - General government overall balance (net lending/borrowing, percent of GDP): -3.7 -0.6 -0.1 -7.8 -4.8 -3.0 -3.0 -3.0 -3.0 - Total state government debt (percent of GDP): 58.8 54.8 54.1 65.9 64.8 64.0 62.9 61.9 60.9 - Gross international reserves (in millions of U.S. dollars): 1,971 1,919 1,996 1,950 1,939 2,084 2,260 2,416 2,767 - Gross reserves (months of next year imports, eop): 4.0 3.9 4.7 4.4 4.2 4.3 4.4 4.5 4.8 ### Program modalities and safeguards (Letter of Intent highlights) - Financing request: 50 percent of quota (SDR 88.8 million) under the “exogenous window” of the RCF and the RFI. - Disbursement destination: Full amount to the account of the Ministry of Finance at the National Bank of the Kyrgyz Republic to provide immediate budget support. - Supplementary budget: planned fiscal deficit of 7.8 percent of GDP in 2020 on account of lower revenues, consistent with available donor financing. - Protected health sector allocation in 2020 budget: KGZ 19 billion ($240 million, 3.0 percent of GDP). - Identified additional health expenditure to contain COVID-19 so far: $9.4 million. - Procurement: subject urgent medical supplies procurement to ex-post audit by the Audit Chamber and publish results on the Ministry of Finance website. - Policy declarations: no intention to introduce measures that would exacerbate balance of payments difficulties, including restrictions on payments and transfers for current international transactions inconsistent with Article VIII. - NBKR safeguard commitments: update safeguards assessment before approval of any subsequent arrangement; provide access to audit reports and external auditors for discussions with IMF staff. - Signatories: Mukhammedkalyi Abylgaziev (Prime Minister), Baktygul Jeenbaeva (Minister of Finance), Tolkunbek Abdygulov (Governor, NBKR). --- ### Annex I — Risk Assessment Matrix (March 2020) — selected entries ### Global risks (relative likelihood / staff assessment / possible impact / policy response) - Rising protectionism and retreat from multilateralism: Relative Likelihood: High; Staff assessment: Medium. Policy response: Diversify trade, FDI and aid. Build up financial buffers. - Sharp rise in risk premia: Relative Likelihood: High; Staff assessment: Medium. Policy response: Allow two-way exchange rate flexibility and build up financial buffers. - More severe COVID-19 pandemic: Relative Likelihood: High; Staff assessment: High. Possible impact: open larger BOP and fiscal financing gaps. Policy response: Use financial buffers, allow exchange rate flexibility, cooperate with donors and UN agencies, mobilize donor support. ### Country-specific risks (relative likelihood / staff assessment / possible impact / policy response) - Insufficient donor financing to close COVID-19 financing gap: Relative Likelihood: Low; Staff assessment: Medium to High. Possible impact: need for fiscal adjustment and reprioritization toward containment and mitigation. - Build-up of high risks in the financial sector from COVID-19: Relative Likelihood: Medium; Staff assessment: Medium. Policy response: Provide liquidity, allow regulatory forbearance, be transparent about financial situation. - Lower gold prices: Relative Likelihood: Medium; Staff assessment: Medium. Policy response: Allow two-way exchange rate flexibility, build up buffers, continue de-dollarization, implement risk-based supervision. --- ### Debt Sustainability Analysis — key findings and policy implications ### Baseline and projections - Total public debt expected to spike to 66 percent of GDP in 2020 due to COVID-19 and KGS depreciation. - Under the assumption that authorities will adhere to fiscal rule keeping deficit at no more than 3 percent of GDP after recovery, total public debt stabilizes around 60 percent of GDP in the medium term. - External debt projected to spike to about 88 percent of GDP in 2020 due to 20 percent KGS depreciation, then decline toward about 75 percent of GDP over the long term. - PV of PPG external debt projected to jump to 38 percent of GDP in 2020, then decline to about 31 percent by the end of the projection horizon. ### Risk rating and vulnerabilities - Overall assessment: moderate risk of debt distress for both external and total public debt. - Vulnerabilities: exposure to shocks to real GDP growth and exports; sensitivity to export shocks under stress tests. - Stress tests: debt resilience holds across standardized stress tests except prolonged lower growth scenario. ### Policy recommendations to reduce vulnerabilities - Maintain fiscal discipline and reduce the deficit to 3 percent of GDP once the economy recovers. - Remain cautious when contracting and guaranteeing new debt; avoid non-concessional financing. - Keep new borrowing on concessional terms. - Strengthen public debt management and public investment management. - Continue improving the business environment to support export potential. --- *Source: EXECUTIVE SUMMARY (1kgzea2020001), Kyrgyz Republic, March 24, 2020.* ### EXECUTIVE SUMMARY ### 1kgzea2020001 - EXECUTIVE SUMMARY ### Context - Outbreak of the COVID-19 pandemic weakened the macroeconomic outlook and opened a balance of payments gap estimated at about $400 million, for which the authorities requested a purchase under the Rapid Financing Instrument (RFI) and a disbursement under the Rapid Credit Facility (RCF) under the “exogenous shock” window of the RCF (see attached Letter of Intent—LOI). - Fund emergency support aims to provide a backstop, increase buffers, shore up confidence, catalyze donor support, and preserve fiscal space for essential COVID-19-related health expenditure. - Authorities are working on processes to ensure the quality of COVID-19 related spending. ### Recent economic developments (2019–early 2020) - Real GDP growth increased to 4.5 percent in 2019 driven by pickup in both gold and non-gold output. - Output gap closed; headline and core inflation remained below the 5–7 percent target range. - Current account deficit narrowed to 9.2 percent of GDP in 2019 (from 12.1 percent in 2018), driven by higher gold exports and lower imports. - Gross official reserves stabilized at 4.7 months of imports of goods and services. - General government budget deficit decreased to 0.1 percent of GDP in 2019; public debt decreased to 54 percent of GDP. - Banking sector: average capital adequacy ratio 22 percent (January 2020); liquid assets to liabilities 69 percent (minimum required 45 percent); NPL ratio increased slightly to 8.1 percent. - Indirect foreign exchange risk is significant: unhedged borrowers earn revenue in KGS but carry debt in US$, comprising about 25 percent of total loans and two thirds of foreign exchange loans. - As of early 2020 there were 42 confirmed COVID-19 cases in the country. - Closure of borders with China (36 percent of goods imports originate from China) led to declines in imports from China by 27 percent and border tax revenue by about 20 percent compared to the same period last year. - Fall in oil prices contributed to a fall in remittances by 15 percent compared to the same period last year. - Headline inflation increased to 4.1 percent year-on-year in February 2020 owing to food prices. - NBKR sold $202 million of foreign exchange reserves so far in 2020 (40 percent more than total FX interventions for the whole year of 2019). - KGS depreciated by 20 percent vis-a-vis the US$ since the beginning of the year after a long period of stability since mid-2016. - NBKR raised the policy interest rate by 75 basis points to 5 percent in February 2020. ### Impact of the shock (baseline assumptions) - Assumes impact from COVID-19 will last for the first half of 2020 due to confidence effects, containment and mitigation efforts, and supply disruptions; fall in international oil prices will depress remittances via Russia. - Real GDP (nongold) growth projected to slow to 0.4 percent in 2020. - Headline inflation projected to increase to 12.0 percent by year-end 2020. - Current account deficit projected to widen to 14.5 percent of GDP in 2020 (from 9.2 percent in 2019). - External financing gap: urgent financing need of about $400 million expected to open; preliminary analysis indicates a balance of payments need of $405 million. - Fiscal impact: general government fiscal deficit expected to widen to 7.8 percent of GDP in 2020 (vs. 1.1 percent of GDP approved in the 2020 budget). - Public debt projected to peak at 66 percent of GDP in 2020 under the shock. - Specific 2020 projections and indicators (selected): - Real GDP (growth in percent): 0.4 (2020) - Consumer prices (12-month percent change, average): 12.0 (2020) - Public Revenue (in percent of GDP): 28.6 (2020) - Tax revenue (in percent of GDP): 17.7 (2020) - Public Current Expense (in percent of GDP): 30.4 (2020) - Net acquisition of nonfinancial assets (in percent of GDP): 6.0 (2020) - Overall balance (net lending/borrowing, in percent of GDP): -7.8 (2020) - Total public debt: 65.9 (2020) - Credit to private sector (percent change, eop): 6.1 (2020) - Current account balance (in percent of GDP): -14.5 (2020) - Gross international reserves (in millions of U.S. dollars): 1,950 (2020) - Gross reserves (months of next year imports, eop): 4.4 (2020) - Balance of Payments Financing, 2020 (in millions of U.S. dollars): - Financing Gap: 405.6 (2020) - Identified budget support: 128.6 (2020) - World Bank: 5.0 (2020) - IMF RFI/RCF disbursement: 123.6 (2020) — assumed blend equal to 50 percent of quota - Unidentified budget support: 277.0 (2020) - Without IMF and donor support, reserves could fall to 3.5 months of imports in 2020 or exchange rate could fall in a destabilizing manner; under a more adverse scenario reserve coverage could fall to 3 months. ### Adverse scenario (12-month shock) - If disruptions last 12 months rather than 6 months: - Real GDP could contract by 3 percent in 2020. - Inflation could increase to 15 percent. - Current account deficit could widen to 17 percent of GDP. - Budget deficit could increase to 10 percent of GDP. - Financing gap in the balance of payments could reach $600 million. - In such a case, a UCT program would likely be needed and authorities are advised to start preparing one immediately. ### Fiscal policy recommendations - Widening fiscal deficit to 7.8 percent of GDP in 2020 is appropriate, provided enough financing is mobilized. - Fiscal loosening should be accommodated in a supplementary budget to prevent the outbreak of COVID-19 and to address the negative output gap. - If donor financing is insufficient, consider expenditure reprioritization in areas that least affect prevention of COVID-19 (examples suggested by staff: reducing tax exemptions or postponing non-priority goods and services or capital expenditures), while protecting expenditure that benefits the poor. - Protect health spending at around budgeted levels (budget includes KGZ 19 billion ($240 million, 3.0 percent of GDP) for the health sector) and accommodate additional estimated health expenditure to contain COVID-19 of $9.4 million (0.1 percent of GDP) so far through cuts in non-essential expenditure. - Authorities commit to subject procurement of urgently needed medical supplies to an ex-post audit by the Audit Chamber, with results published on the Ministry of Finance website. ### Monetary and exchange rate policy recommendations - Monetary policy should be data dependent given significant uncertainties. - Recent policy rate hike to 5 percent is in line with the estimated neutral interest rate, but widening output gap could justify easing the policy rate. - Temporary increase in headline inflation owing to exchange rate weakening should be accommodated; monitor second-order effects and adjust stance if risk of sustained broad-based inflation above target range emerges. - NBKR should stand ready to provide liquidity to the financial system and ensure transparent information on eligible collateral. - Exchange rate flexibility is welcome; FX intervention should be limited to addressing disorderly market conditions. Authorities should not resist exchange rate adjustments driven by market reassessment of fundamentals; capital flow measures may be discussed if needed. ### Financial sector policy recommendations - Provide liquidity support to the financial system as needed, ensuring transparent collateral rules. - Use banks’ capital and liquidity buffers to absorb credit losses and liquidity stress; once buffers are exhausted, show flexibility on timing of restoring capital and liquidity above minimum requirements. - Monitor and mitigate indirect foreign exchange risk stemming from unhedged borrowers. ### Access, capacity to repay, modalities and safeguards - Debt distress is moderate. - Capacity to repay the Fund is adequate. - A blended RFI/RCF disbursement equal to 50 percent of quota is envisaged to provide urgent balance of payments support and catalyze donor financing. ### Risks and contingency planning - Considerable margin of uncertainty with significant downside risks highlighted in the Risk Assessment Matrix (Annex I). - If the crisis is more protracted and intense, a larger balance of payments gap and the need for stronger policy adjustment and further financing from development partners would arise. - Authorities advised to prepare for a UCT program to catalyze longer-term donor support if the shock worsens. *Source: EXECUTIVE SUMMARY (1kgzea2020001), Kyrgyz Republic, March 24, 2020.* ### 11. However, the widening of the deficit in 2020 needs to be embedded in a medium-term ### 1kgzea2020001 - 11. However, the widening of the deficit in 2020 needs to be embedded in a medium-term ### Medium-term fiscal plan and deficit reduction - Widening of the deficit in 2020 should be embedded in a medium-term fiscal plan that brings the fiscal deficit down to 3 percent of GDP within a few years once the temporary shock has passed and confidence has been restored. - Priority areas for reducing the deficit in the medium term: - Large tax exemptions. - Energy sector subsidies (2.0 percent of GDP). - Tighter management of the wage bill (11.5 percent of GDP in 2019). - Improvements in public financial management. ### Debt outlook and sustainability - The Kyrgyz Republic’s risk of debt distress is expected to remain “moderate”. - Public debt projections: - Public debt is expected to increase to 66 percent of GDP in 2020 due to a higher fiscal deficit from COVID-19. - If the authorities keep the general government deficit at 3 percent of GDP in the short and medium term and continue to get external financing from donors at concessional terms, total public debt will be maintained at around 60 percent of GDP in the long term. - The depreciation of the KGS since the beginning of the year does not change the “moderate” risk assessment. - Standardized stress tests indicate resilience of external and public debt assessments to more severe COVID-19 impacts than assumed in this staff report. ### Financial sector policy - Banking sector position and risks: - The banking sector is well capitalized and liquid and should be able to absorb credit losses and a liquidity squeeze if the crisis is short-lived. - Vulnerabilities may emerge given expected economic disruption from COVID-19, especially in textile, transport, and tourism sectors. - Enterprises in most impacted sectors may temporarily fall short of liquidity to service debt to commercial banks. - Households whose primary earners lose employment may face difficulties servicing mortgages or consumer loans. - Depreciation of the exchange rate may adversely affect enterprises with revenue in KGS but debt service in US dollars. - Policy recommendations for the banking sector: - Continue to implement prudential rules to make the impact of the crisis on banking sector soundness transparent. - When banks have absorbed their capital and liquidity buffers, the NBKR should agree with banks on plans to bring capital and liquidity above the minimum required, showing some flexibility on timing considering the length of the crisis. - The NBKR should encourage banks to restructure debt of temporarily illiquid but otherwise solvent borrowers with viable prospects under normal conditions to prevent exacerbating the downturn or widespread credit stress. ### Access, capacity to repay, modalities and safeguards - Estimated Fund access and rationale: - Staff estimates that a single disbursement of around 50 percent of quota (SDR 88.8 million or about US$ 123 million) will be needed given the magnitude of the financing requirement. - With the proposed access level of 50 percent of quota: 16.7 percent of quota (SDR 29.6 million) will be provided under the RCF and 33.3 percent of quota (SDR 59.2 million) under the RFI. - The request is made under the “exogenous shock” window of the RCF. - The macroeconomic framework provided by the Fund would help identify financing needs and catalyze donor support; preliminary discussions with donors (Eurasian Fund for Stability and Development, Asian Development Bank, World Bank) indicate such Fund support is likely to catalyze donor support. - The Kyrgyz Republic needs blended financial support under the RCF and RFI because per-capita gross national income now exceeds the IDA threshold and debt vulnerabilities are moderate. - The size of the financing gap is estimated at slightly more than twice this level of access. - Capacity to repay: - Fund credit outstanding would peak at 12 percent of gross international reserves and 10 percent of exports of goods and services. - Modalities and safeguards: - Authorities have requested channeling the expected RFI purchase and RCF disbursement directly to the budget. - A Memorandum of Understanding between the NBKR and the Ministry of Finance will: (i) commit to maintaining funds received from the IMF in a government account at the central bank, pending their use, (ii) require the government to hold foreign exchange balances only with the NBKR, and (iii) clarify responsibilities for repaying Fund resources. - The NBKR commits to undergo a safeguards assessment, which must be completed before Executive Board approval of any subsequent arrangement, and to authorize the central bank’s external auditors to hold discussions with staff. ### Staff appraisal and macroeconomic outlook - Economic impact and financing gap: - The COVID-19 pandemic has hit the economy very hard and created an urgent balance of payments need. - Under the assumption that the crisis will last until mid-year, a financing gap of about $400 million has opened in the balance of payments. - Despite sizeable foreign exchange interventions, the exchange rate has depreciated by 20 percent since the beginning of the year, triggering a rise in inflation and a deterioration of credit risk. - The fiscal position has been weakening, with a steep rise of the budget deficit in sight in 2020. - Policy stance to address the crisis: - Temporary loosening of macroeconomic and financial policies as well as expeditious donor support are needed. - Accommodate a temporary increase in headline inflation owing to exchange rate weakening, while monetary policy should gradually bring inflation back within its target range in 2021. - Continue exchange rate flexibility to restore external balance. - Temporary widening of the budget deficit stemming from weakening tax revenue should be accommodated, provided it can be fully financed with donor financing; otherwise reprioritization of spending toward the health sector will be needed. - Banks’ capital and liquidity buffers need to be used to absorb credit losses and the liquidity squeeze; once these buffers are exhausted, the NBKR should show some flexibility on the timing of bringing capital and liquidity above the minimum required, considering the length of the crisis. *Source: 1kgzea2020001 - 11. However, the widening of the deficit in 2020 needs to be embedded in a medium-term* ### 19. Staff supports the proposed purchase under the RFI and disbursement under the RCF. ### 1kgzea2020001 - 19. Staff supports the proposed purchase under the RFI and disbursement under the RCF. ### Staff recommendation and risk assessment - Staff supports the proposed purchase under the RFI and disbursement under the RCF. - The risk of debt distress is moderate. - The capacity to repay the Fund is adequate. ### Key macroeconomic indicators and projections (as presented) - Population (in millions, 2017): 6.3 - GINI Index (2017): 27.3 - Unemployment rate (official, in percent, 2017): 6.9 - Life expectancy at birth in years (2017): 71.2 - Poverty rate (in percent, national definition, 2018): 22.4 - Adult literacy rate (percent of popul., 2015): 99.5 - Per capita GDP (2018, U.S. dollars): 1,293 - Under-five mortality (per 1000 live births, 2017): 20 - Nominal GDP (in millions of U.S. dollars): 7,703 8,271 8,455 8,052 8,546 9,026 9,568 10,149 10,768 - Real GDP (growth in percent): 4.7 3.5 4.5 0.4 6.0 4.3 4.0 4.1 4.1 - Nongold real GDP (growth in percent): 5.1 3.5 3.8 0.4 6.3 4.1 4.2 4.3 4.3 - GDP per capita (in U.S. dollars): 1,255 1,322 1,323 1,236 1,284 1,328 1,380 1,434 1,490 - Consumer prices (12-month percent change, eop): 3.7 0.5 3.1 2.0 7.0 5.0 5.0 5.0 5.0 - Consumer prices (12-month percent change, average): 3.2 1.5 1.1 0.6 7.2 5.3 5.0 5.0 5.0 - Investment (in percent of GDP): 30.7 27.7 27.7 28.4 28.0 28.0 26.4 25.9 25.8 - Savings (in percent of GDP): 24.5 15.7 18.5 13.9 18.0 20.5 19.1 18.8 18.8 - Savings-investment balance: -6.2 -12.1 -9.2 -14.5 -10.0 -7.5 -7.3 -7.1 -7.0 - General government revenue (in percent of GDP): 33.3 32.5 34.0 28.6 30.1 30.3 30.6 30.9 31.1 - General government expense (in percent of GDP): 29.2 27.9 28.7 30.4 29.5 29.0 28.2 27.9 27.7 - General government overall balance (net lending/borrowing, in percent of GDP): -3.7 -0.6 -0.1 -7.8 -4.8 -3.0 -3.0 -3.0 -3.0 - Total state government debt (percent of GDP): 58.8 54.8 54.1 65.9 64.8 64.0 62.9 61.9 60.9 - Domestic debt (percent of GDP): 5.8 7.8 8.7 9.4 11.2 12.2 12.4 13.1 13.3 - Reserve money (percent change, eop): 16.9 6.3 11.0 15.1 21.8 16.5 14.1 16.5 18.6 - Broad money (percent change, eop): 17.9 5.5 12.8 15.7 22.5 17.1 14.7 16.5 18.6 - Credit to private sector (percent change, eop): 15.7 18.2 14.9 6.1 18.9 11.1 10.5 10.5 10.5 - Credit to private sector (in percent of GDP): 20.8 22.9 25.4 24.5 25.4 25.7 26.0 26.3 26.6 - Current account balance (in percent of GDP): -6.2 -12.1 -9.2 -14.5 -10.0 -7.5 -7.3 -7.1 -7.0 - Exports of goods and services (in millions of U.S. dollars): 2,638 2,746 2,817 2,395 2,741 3,077 3,265 3,473 3,722 - Imports of goods and services (in millions of U.S. dollars): 5,113 5,913 5,840 5,135 5,336 5,542 5,822 6,128 6,504 - Gross international reserves (in millions of U.S. dollars): 1,971 1,919 1,996 1,950 1,939 2,084 2,260 2,416 2,767 - Gross reserves (months of next year imports, eop): 4.0 3.9 4.7 4.4 4.2 4.3 4.4 4.5 4.8 - External public debt outstanding (in percent of GDP): 53.0 47.0 45.5 56.5 53.5 51.8 50.5 48.9 47.6 - External public debt service-to-export ratio (in percent): 6.6 6.7 -0.3 8.6 7.3 7.7 7.5 8.5 7.4 ### Indicators of capacity to repay the Fund (selected) - Principal (in millions of SDRs) shown across years: 18.3 20.7 17.5 17.8 17.1 16.2 16.2 13.3 10.5 - Charges and interest (in millions of SDRs) shown across years: 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - Fund obligations based on existing credit (outstanding Fund credit, in millions of SDRs): 140.6 129.5 102.4 172.5 155.4 139.2 100.9 57.9 37.1 - Net use of Fund credit (in millions of SDRs): 0.8 -20.7 -17.5 71.0 -17.1 -16.2 -38.4 -42.9 -20.8 - Memorandum items: Nominal GDP (in millions of U.S. dollars): 7,703 8,271 8,455 8,052 8,546 9,026 9,568 10,149 10,768 - Memorandum items: Gross International Reserves (in millions of U.S. dollars): 1,971 1,919 1,996 1,954 1,943 2,088 2,265 2,420 2,772 *Source: Kyrgyz authorities and IMF staff estimates and projections, as presented in the cited IMF chapter.* ### Annex I. Risk Assessment Matrix (March 2020) ### Annex I. Risk Assessment Matrix (March 2020) ### Global risks (RAM entries, relative likelihood, staff assessment, possible impact, policy response) - Rising protectionism and retreat from multilateralism - Relative Likelihood: High - Staff assessment: Medium - Possible impact: Shock could transmit through trade, foreign direct investment (FDI) and aid from affected countries. - Policy response: Diversify trade, FDI and aid. Build up financial buffers. - Sharp rise in risk premia (abrupt reassessment of market fundamentals) - Relative Likelihood: High - Staff assessment: Medium - Possible impact: Higher debt service and refinancing risks; stress on leveraged firms, households, and vulnerable sovereigns; capital outflows. - Policy response: Allow two-way exchange rate flexibility and build up financial buffers. - Social discontent that causes economic disruption and policy missteps - Relative Likelihood: Medium - Staff assessment: Medium - Possible impact: Social tensions globally could spill over to the Kyrgyz Republic, with implications for political and economic stability. - Policy response: Adopt policies/reforms to foster higher and more inclusive growth and strengthen social safety nets. - More severe COVID-19 pandemic (widespread and prolonged disruptions) - Relative Likelihood: High - Staff assessment: High - Possible impact: Impact growth and transmit through trade, FDI and aid; open larger balance of payments (BOP) and fiscal financing gaps. - Policy response: Use financial buffers as needed. Allow exchange rate flexibility. Cooperate with specialized donors and UN-specialized agencies to contain spread of coronavirus and strengthen health care system. Mobilize donor support to close financing gaps. - Intensified geopolitical tensions and security risks (e.g., developments in the Middle East) - Relative Likelihood: High - Staff assessment: Medium - Possible impact: Shock could transmit through impact on gold and oil prices; could translate into a positive terms of trade shock with gold prices increasing. - Policy response: Build up financial buffers. - Weaker-than-expected global growth (U.S., Europe, China, large emerging economies) - Relative Likelihood: High - Staff assessment: Medium - Possible impact: Shock could transmit through trade, FDI and aid from affected countries. - Policy response: Allow two-way exchange rate flexibility, build financial buffers and diversify trade, FDI and aid. - Large swings in energy prices affecting main trading partners (Russia and Kazakhstan) - Relative Likelihood: High - Staff assessment: High - Possible impact: Transmit through remittances, oil imports, exchange rate, external demand, investment and aid flows from affected countries. - Policy response: Allow two-way exchange rate flexibility, build up financial buffers, continue implementing de-dollarization strategy, and implement risk-based financial sector supervision. - Cyber-attacks on critical infrastructure - Relative Likelihood: Low - Staff assessment: Low - Possible impact: Reduce confidence and growth; trigger systemic financial instability or widespread disruptions. - Policy response: Implement policies to protect critical financial, transport, communication or energy infrastructure. - Higher frequency and severity of natural disasters - Relative Likelihood: Medium/Low - Staff assessment: Low - Possible impact: Reduce confidence and growth; severe economic damage to smaller economies and potential disruption to global GDP. - Policy response: Build financial buffers. ### Country-specific risks (RAM entries, relative likelihood, staff assessment, possible impact, policy response) - Insufficient donor financing to close COVID-19 financing gap - Relative Likelihood: Low - Staff assessment: Medium to High - Possible impact: Reduce confidence and growth; need for fiscal adjustment and reprioritization of spending toward containment and mitigation of COVID-19. - Build-up of high risks in the financial sector from COVID-19 - Relative Likelihood: Medium - Staff assessment: Medium - Possible impact: Banks may fall short of minimum capital levels and face liquidity pressures; households and companies’ balance sheets imperiled, including through depreciation of the exchange rate. - Policy response: Stand ready to provide liquidity to the financial system and allow regulatory forbearance while assessing long-term solvency prospects and being transparent about the underlying financial situation. - Lower gold prices - Relative Likelihood: Medium - Staff assessment: Medium - Possible impact: Lower gold prices would weaken growth, the external and fiscal positions. - Policy response: Allow two-way exchange rate flexibility. Build up financial buffers. Strengthen the business environment to diversify the economy. ### Letter of Intent — IMF emergency financing request and fiscal/health response (key points and exact figures) - Financing request - Request: 50 percent of quota (SDR 88.8 million) under the “exogenous window” of the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI). - Disbursement destination: Full amount to the account of the Ministry of Finance at the National Bank of the Kyrgyz Republic to provide immediate budget support. - Economic impact and indicators - Annual inflation rate: 4.1 percent in February 2020. - Current account deficit: expected to widen to 14.5 percent of GDP in 2020. - Balance of payments gap: US$400 million. - Remittances: account for almost a third of GDP (suppressed by lower oil prices). - Fiscal response and budgetary targets - Supplementary budget: planned fiscal deficit of 7.8 percent of GDP in 2020 on account of lower revenues, consistent with available donor financing. - Protected health sector allocation in 2020 budget: KGZ 19 billion ($240 million, 3.0 percent of GDP) — to be protected by expenditure reallocation if needed. - Identified additional health expenditure to contain COVID-19 so far: $9.4 million. - Fiscal commitment: Bring the deficit down to below 3 percent of GDP over the next two years once the impact of the shock dissipates. - Procurement and transparency - Commitment: Subject procurement of urgently needed medical supplies to an ex-post audit by the Audit Chamber; publish results on the website of the Ministry of Finance. - Capacity to repay IMF - Statement: Capacity to repay the Fund remains adequate. Repayment ratios to fiscal revenue and exports of goods and services will remain manageable considering disbursement under the RCF and RFI. - Memorandum of Understanding between NBKR and Ministry of Finance: (i) maintain IMF funds in a government account at the NBKR pending use; (ii) require the government to hold foreign exchange balances only with the NBKR; (iii) clarify responsibilities for repaying Fund resources. - Debt distress assessment: Risk of debt distress will remain moderate owing to commitment to bring fiscal deficit below 3 percent of GDP over the next two years. - Policy declarations - No intention to introduce measures that would exacerbate balance of payments difficulties, including restrictions on payments and transfers for current international transactions, trade restrictions for BOP purposes, multiple currency practices, or bilateral payments agreements inconsistent with Article VIII of the Fund’s Articles of Agreement. - NBKR safeguard assessment: NBKR committed to undergo an update of the safeguards assessment before approval of any new subsequent arrangement by the IMF Executive Board and to provide access to audit reports and authorize external auditors to hold discussions with IMF staff. - Signatories - Mukhammedkalyi Abylgaziev, Prime Minister of the Kyrgyz Republic - Baktygul Jeenbaeva, Minister of Finance of the Kyrgyz Republic - Tolkunbek Abdygulov, Governor of the National Bank of the Kyrgyz Republic ### Monetary and financial sector policy responses (NBKR commitments and actions) - Monetary policy stance - NBKR intends to continue data dependent monetary policy and accommodate a temporary increase in headline inflation due to exchange rate weakening. - Inflation target range: aim to gradually bring inflation back within the 5-7 percent target range in 2021. - Exchange rate regime: continue implementing a flexible foreign exchange regime and limit foreign exchange interventions to smooth sharp fluctuations of the exchange rate. - Reserves: NBKR will implement measures to reverse the deterioration of international reserves once confidence is restored over the medium term. - Financial sector measures - Provide liquidity to the financial system if needed; ensure transparent information on eligible collateral. - Continue implementing prudential rules in a transparent manner, including measures to address foreign exchange vulnerabilities of businesses with local currency revenues and foreign currency liabilities. - Allow banks to use capital and liquidity buffers to absorb credit losses and liquidity squeeze. - If capital and liquidity fall below prudential minimums, show prudent flexibility on timing of returning above minimums depending on crisis length. - Encourage banks and non-bank financial institutions to restructure debt of temporarily illiquid but otherwise solvent borrowers with viable prospects under normal conditions. ### Key statistics and relations with the Fund (as of February 29, 2020) - IMF membership: Joined: May 8, 1992; Article VIII. - Quota and holdings (SDR million / Percent of Quota) - Quota: 177.60 (100.00) - Fund Holdings of Currency (Exchange Rate): 177.45 (99.91) - Reserve Tranche Position: 0.31 (0.18) - SDR Department - Net Cumulative Allocation: 84.74 (100.00) - Holdings: 106.78 (126.00) - Outstanding purchases and loans (SDR million; Percent of Quota) - RCF Loans: 4.44 (2.50) - ECF Arrangements: 97.04 (54.64) - Latest financial arrangements (as listed) - RCF/RFI: Amount Approved 88.8; Amount Drawn 88.8 (SDR million) — (date fields shown as March xx, 2019 in source) - ECF April 8, 2015 — April 7, 2018: Amount Approved 66.60; Amount Drawn 57.08 (SDR million) - ECF June 20, 2011 — July 7, 2014: Amount Approved 66.60; Amount Drawn 66.60 (SDR million) - ESF December 10, 2008 — June 9, 2010: Amount Approved 66.60; Amount Drawn 33.30 (SDR million) - Projected payments to the Fund (SDR million; forthcoming) - 2020 Principal: 17.76 - 2021 Principal: 17.13 - 2022 Principal: 16.17 - 2023 Principal: 16.17 - 2024 Principal: 13.32 - Charges/Interest: 0.00 for 2020–2024 (as shown) - Safeguards assessment summary (key points) - Update assessment completed October 5, 2015 with conclusion that NBKR continues to have significant vulnerabilities in legal structure, particularly governance arrangements. - Audit committee authority limited (advisory role only); Banking Law adopted September 2016 did not address all safeguards recommendations; Office of the President requested amendments that claw back some improvements in central bank independence. - Key outstanding concern: Composition of NBKR Board comprised only of executive members. - Exchange rate arrangements - Currency: som (100 tyiyn = 1 som) since May 10, 1993. - De jure exchange rate arrangement: floating arrangement. - NBKR participates and intervenes in the interbank foreign exchange market to limit exchange rate volatility as necessary. - De facto exchange rate arrangement reclassified to stabilized from other managed, effective January 26 (year as given in source). *Annex I. Risk Assessment Matrix (March 2020), Kyrgyz Republic* ### 2018. The NBKR publishes daily the exchange rate of the som in terms of the U.S. dollar, which is ### 1kgzea2020001 - 2018. The NBKR publishes daily the exchange rate of the som in terms of the U.S. dollar, which is ### Exchange rate determination and official rate - The NBKR publishes daily the exchange rate of the som in terms of the U.S. dollar, determined in the interbank foreign exchange market. - The official exchange rate of the som against the dollar is calculated as the daily weighted average of the exchange rates used in the purchase and sale transactions of dollars conducted in the foreign exchange market through the Automated Trade System (ATS) of the NBKR for the reporting period from 3:00 pm of the previous trading day to 3:00 pm of the current trading day. - The government uses the official exchange rate for budget and tax accounting purposes as well as for all payments between the government and enterprises and other legal entities. - The official rate may differ by more than 2 percent from market rates because it is based on the average transaction weighted rate of the preceding day. - The authorities intend to continue to use the official exchange rate for government transactions. - Staff does not recommend approval of this multiple currency practice (MCP). ### Exchange system restrictions and security-related measures - The Kyrgyz Republic maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions, except for: - the MCP described above; and - exchange restrictions maintained for security reasons relating to the restriction of financial transactions and the freeze of accounts of certain individuals or organizations associated with terrorism pursuant to (i) relevant U.N. Security Council resolutions; and (ii) the list of current terrorist organizations designated by the U.S. Secretary of State. - The authorities notified these measures to the Fund in May 2007. ### Surveillance, consultations, and resident representation - The Kyrgyz Republic is on a 12-month consultation cycle. - The 2019 Article IV consultation discussions were held in March 2019 and were completed by the Executive Board in June 2019. - The eleventh resident representative of the Fund in the Kyrgyz Republic, Mr. Poghosyan, took his post in Bishkek in March 2019. ### FSAP and ROSC participation - An FSAP update mission in July 2013 reviewed progress since the 2007 assessment; the Board discussed the Financial System Stability Assessment (FSSA) along with the fifth ECF review in December 2013. The FSSA was not published. - Fiscal ROSC mission: March 2001; ROSC Fiscal Transparency Module published on March 13, 2002; fiscal ROSC reassessment in September 2007. - Data ROSC mission: November 2002; ROSC Data Module published in November 2003. ### Relations with other international institutions (As of March 23, 2020) - Asian Development Bank, European Bank for Reconstruction and Development, and World Bank Group country engagement and projects are listed (institutional relations noted as of March 23, 2020). ### Technical assistance provided by the Fund (January 2014–March 2019) — selected items - FAD: Tax Administration Enforcement (Module 6—TPA TTF) January 8–22, 2014; Public Finance Management May 2–13, 2014; Public Finance Management December 5–18, 2014; others through 2019. - MCM: Operational Advice on Improving the Monetary Policy Framework February 3–14, 2014; Monetary Policy and Inflation Targeting Framework April 10–25, 2017; Inflation Targeting October 29–November 14, 2018; Cyber Security March 6–20, 2019; Strengthening the Payment System Oversight May 2019; Strengthening Monetary Policy Operations September 2019. - LEG/AML/CFT follow-ups: various missions between February 2014 and October 2018. - STA and statistics missions: Price Statistics March 31–April 11, 2014; External Sector Statistics February 16–27, 2015; Monetary and Financial Statistics April 15–28, 2015; Quarterly National Accounts April 11–16, 2016; Government Finance Statistics April 11–22, 2016; National Accounts EDDI2 April 17–28, 2017; and additional missions through May 2019 and September-October 2019. ### Statistical issues — institutional capacity and data quality - Four institutions responsible for macroeconomic statistics: National Statistics Committee (NSC), Ministry of Economy, Ministry of Finance, National Bank of the Kyrgyz Republic (NBKR). - NSC maintains a comprehensive and regularly updated website and in February 2004 the Kyrgyz Republic subscribed to the SDDS. - National accounts: - Dissemination is generally timely. - Problems persist with the quality of source data and proper estimation of the degree of underreporting, especially in the private sector. - Quarterly GDP estimates were historically derived from cumulative data; work since 2016 has aimed to produce discrete quarterly estimates. - Five IMF technical assistance missions on national accounts were conducted during 2016–18; the latest mission in November 2018 finalized the compilation of quarterly GDP estimates for 2010–17. - The NSC planned to disseminate discrete quarterly estimates of GDP by June 2019. - Improvements to annual GDP estimates included reducing discrepancies between GDP by production and expenditure and improving imputed rent estimates for owner-occupied dwellings. - Price and labor market statistics: - CPI published since January 1995; broadly consistent with international standards but needs to cover rural households. - PPI published since October 1996; broadly in accordance with international standards but coverage needs improvement. - Progress on unit value indices for imports and exports; problems in customs administration and outdated software hinder coverage and valuation of trade data. - Problems in average wage compilation: valuation of payments in kind and private sector coverage; monthly and annual data not comparable due to different coverage and classifications; similar problems for employment and unemployment data (unemployment includes estimate of unregistered unemployed). - Government Finance Statistics (GFS): - Beneficiary of a SECO funded three-year project (2016-2019) to improve fiscal transparency. - Since 2018 Ministry of Finance compiles and disseminates annual GFS for whole general government, extended coverage with balance sheet and functional classification of expenditure. - Starting Q1 2018 authorities began reporting quarterly general government data for publication in the IFS. - Data reported for publication in the GFS Yearbook start in 2012 and cover general government and subsectors; compiled using GFSM 2014 analytical framework. - On-lending to loss-making energy state-owned enterprises is incorrectly classified as accumulation of financial assets below the line rather than transfers above the line (inconsistent with the GFSM Manual). - In May 2018 Kyrgyz Republic started regularly reporting debt securities and loans to the common WB/IMF quarterly Public Sector Debt Statistics (PSDS) database. - Ministry of Finance work priorities: (i) reconciling the deficit and financing data; (ii) compiling quarterly data and metadata for all PSDS instruments; (iii) reconciling all macroeconomic statistics. - Monetary and Financial Statistics (MFS): - NBKR reports regular data using IMF Standardized Report Forms (SRFs) covering SRF 1SR, SRF 2SR, and SRF 4SR. - NBKR needs to expand coverage of the OFC survey to include insurance corporations, pension funds, and investment funds. - NBKR reports some Financial Access Survey (FAS) indicators, including two U.N. SDG indicators. - NBKR reports Financial Soundness Indicators (FSIs) quarterly; all core and additional FSIs relevant for the Kyrgyz Republic are reported. - External Sector Statistics: - Since 2017 quarterly balance of payments and IIP compiled and disseminated on BPM6 basis, meeting SDDS timeliness and periodicity. - Further improvements needed in estimation of shuttle trade and remittances, coverage of direct investment transactions (inward and outward) including investment income, and in adjusting trade statistics to EAEU requirements and reconciling customs declarations. - Kyrgyz Republic participates in the IMF’s Coordinated Direct Investment Survey (CDIS). - External Debt Division of the Ministry of Finance monitors public sector external debt and submits gross external debt statistics (GEDS) to the World Bank’s QEDS database, in collaboration with NBKR for private sector external debt inputs. ### Table of Common Indicators Required for Surveillance (As of March 23, 2020) — selected entries (Date of Latest Observation / Date Received / Frequency of Data / Frequency of Reporting / Frequency of Publication) - Exchange Rates: 2/29/2020 3/9/2020 M M M - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: 2/29/2020 3/9/2020 M M M - Reserve/Base Money: 2/29/2020 3/9/2020 M M M - Broad Money: 1/31/2020 3/12/2020 M M M - Central Bank Balance Sheet: 2/29/2020 3/9/2020 M M M - Consolidated Balance Sheet of the Banking System: 1/31/2020 3/12/2020 M M M - Interest Rates: 1/31/2020 3/9/2020 M M M - Consumer Price Index: 11/31/19 1/31/20 M M M - Revenue, Expenditure, Balance, and Composition of Financing—General Government: 1/31/19 1/31/19 M M A - Revenue, Expenditure, Balance, and Composition of Financing—Central Government: 1/31/19 1/31/19 M M M - Stocks of Central Government and Central Government-Guaranteed Debt: 12/31/18 12/31/18 Q Q Q - External Current Account Balance: 9/30/19 2/20/20 Q Q Q - Exports and Imports of Goods and Services: 9/30/19 2/20/20 Q Q Q - GDP/GNP: 3/31/19 3/31/19 M M M - Gross External Debt: 9/30/18 9/30/18 Q Q A - International Investment Position: 9/30/19 2/20/20 Q Q Q ### Debt Sustainability Analysis (DSA) — summary findings and recommendations - The DSA indicates that the Kyrgyz Republic remains at moderate risk of debt distress, with some space for both external debt and overall public debt. - Projection notes: - Total public debt is expected to spike to 66 percent of GDP in 2020 in reaction to the outbreak of the COVID-19 pandemic and the depreciation of KGS vis-à-vis the US dollar. - Assessment assumes authorities will strictly adhere to their fiscal rule of keeping the budget deficit at no more than 3 percent of GDP once the economy has fully recovered. - Current debt-carrying capacity is assessed as strong. - Debt outlook vulnerabilities: - Vulnerable to shocks to real GDP growth and exports. - Policy recommendations to reduce vulnerabilities: - Remain cautious when contracting and guaranteeing new debt, including by avoiding non-concessional financing. - Improve public investment management. *Prepared by staffs of the International Monetary Fund and the International Development Association. March 24, 2020* ### 1. The debt coverage is limited to state government debt (both central and local ### 1. The debt coverage is limited to state government debt (both central and local ### Debt coverage and contingent liabilities - Debt coverage is limited to state government debt (both central and local government), state guarantees, and the debt of the central bank towards the IMF. - Almost all the public sector debt is issued by the central government. Local governments have no external debt and insignificant domestic debt. - The social security fund has no debt. - State-owned enterprises (SOEs) have no external debt and limited short-term domestic borrowing from the banking sector; most SOE borrowing is from the government. - The budget code prevents the state from guaranteeing debt of SOEs and other public entities since 2007, except for cases stipulated by international and inter-governmental organization obligations. - A contingent liability shock of 7 percent of GDP was applied, composed of: - 2 percent of GDP reflecting risks around the operation of SOEs (about the structural cash shortfall of loss-making energy sector SOEs) - 5 percent of GDP representing the default value (average cost to the government during a financial crisis) - Text Table 1 identifies coverage of: central government (X), state and local government (X), guarantees (X), and central bank (borrowed on behalf of the government) (X). Non-guaranteed SOE debt is listed separately. ### Recent public debt trends (2010–2019) and composition - Public debt increased to 67 percent of GDP in 2015 following substantial depreciation of KGS against the US$ during 2014–15. - Russian debt write-off in 2018: $240 million in 2018, or 3 percent of GDP. - General government budget deficits: 0.6 percent of GDP in 2018 and 0.1 percent of GDP in 2019. - Total public debt declined to 54.1 percent of GDP in 2019. - Domestic debt increased from 3.6 percent of GDP in 2015 to 8.7 percent of GDP in 2019, accounting for about 16 percent of total debt. - Domestic public debt holders: commercial banks 50 percent, social security fund 30 percent. ### Underlying macroeconomic assumptions and projections (selected) - Real GDP growth (Current DSA): 2020 = 4.5; 2021 = 0.4; 2022 = 6.0; 2023 = 4.3; 2024 = 4.0; 2025 = 4.1; 2026 = 4.1 - Overall fiscal balance (percent of GDP, Current DSA): 2020 = -0.1; 2021 = -7.8; 2022 = -4.8; 2023 = -3.0; 2024 = -3.0; 2025 = -3.0 - Current account balance (percent of GDP, Current DSA): 2020 = -9.2; 2021 = -14.5; 2022 = -10.0; 2023 = -7.5; 2024 = -7.3; 2025 = -7.1; 2026 = -7.0 - PIP Disbursements (millions of US$, Current DSA): 2020 = 268; 2021 = 362; 2022 = 415; 2023 = 395; 2024 = 416; 2025 = 438; 2026 = 464 - Projections note: 2020 projections substantially worsened due to COVID-19, border closure with China, and 20 percent depreciation of KGS vis-à-vis the USD since the beginning of the year. - Growth expected to rebound in 2021 and return to potential ~4 percent over the medium term. - Inflation projected to spike to about 11 percent in the short term, then stay at lower end of authorities’ target range (5 to 7 percent). - Fiscal deficit expected to widen to 7.8 percent of GDP in 2020, then decrease to 3 percent of GDP by 2022 in line with proposed fiscal rule. - Public debt expected to spike to 66 percent of GDP in 2020 and then stabilize at about 60 percent of GDP in the medium-to-long term. - Current account deficit expected to widen to about 14.5 percent of GDP in 2020, then reduce to 7 percent of GDP in the short and medium term. - Financing assumptions: new external borrowing assumed to remain on concessional terms; domestic debt on market terms expected to double from 8 to 16 percent of GDP over the projection horizon. ### Realism checks and diagnostics - Unexpected changes to Kyrgyz Republic’s external debt are below the interquartile range for LICs due to large KGS depreciation during 2014–16; unexpected changes to public debts are within the interquartile range. - Projected 3-year adjustment in the primary balance is near the median and well below the top quartile of past LIC adjustments under IMF programs. - Growth projection for 2020 is below the growth path suggested by a fiscal multiplier of 0.2 due to COVID-19 and KGS depreciation. - Contribution of public investment to growth is slightly higher than previous DSA but still below historical contribution. ### Debt-carrying capacity and thresholds - Debt-carrying capacity: Strong. - Composite Indicator (CI) index: 3.19 (above threshold 3.05). - External debt burden thresholds (Strong classification): - PV of external debt-to-exports: 240 - PV of external debt-to-GDP: 55 - PV of external debt service-to-exports: 21 - PV of debt service-to-revenue: 23 - Total public debt benchmark (PV of total public debt-to-GDP): 70 ### External DSA findings - Total external debt: about 76 percent of GDP in 2019. - External PPG debt: 46 percent of GDP in 2019. - Private external debt: 31 percent of GDP in 2019. - External debt projected to spike to about 88 percent of GDP in 2020 due to 20 percent KGS depreciation. - External debt projected on a downward trajectory to about 75 percent of GDP over the long term. - PV of PPG external debt projected to jump to 38 percent of GDP, then decline to about 31 percent of GDP by end of projection horizon — below the 55 percent threshold. - PV of PPG external debt-to-exports breaches its threshold for three years (2022-24) under an exports shock scenario. - Debt service to revenue ratio remains well below its threshold even under the most extreme export shock. - Standardized stress tests (growth, primary balance, depreciation, combined shocks B1–B5) indicate external debt sustainability remains resilient to more severe COVID-19 impacts than assumed. ### Public DSA findings - Risk of total public debt distress: Moderate. - Public debt outlook worsened in 2020 due to COVID-19 and KGS depreciation. - Higher primary deficit, depreciation, and lower growth increase public debt by 12 percent to 66 percent of GDP in 2020. - Total public debt expected to hover around 61 percent of GDP over the medium term. - PV of total public debt projected to stay between 40 and 50 percent of GDP — below 70 percent sustainability threshold. - Vulnerabilities: total public debt is sensitive to real GDP growth and exports; under real GDP growth shock, PV of debt-to-GDP breaches its sustainability threshold in 2026 and remains above it until end of projection horizon. - Public debt resilience holds across standardized stress tests except prolonged lower growth scenario (alternative scenario B1). ### Risk rating, vulnerabilities, and policy recommendations - Overall assessment: moderate risk of debt distress for both external and total public debt. - External PPG debt remains vulnerable to large external shocks, declines in exports and other flows (official and private transfers, FDI), and KGS depreciation. - Given gaps between debt burden indicators and thresholds, Kyrgyz Republic has some space to absorb shocks without being downgraded to high risk of debt distress. - Authorities should: - Maintain fiscal discipline and reduce the deficit to 3 percent of GDP once the economy recovers from COVID-19. - Remain cautious when contracting or guaranteeing new debt and rigorously adhere to the fiscal rule being considered by Parliament thereafter. - Keep new borrowing on concessional terms. - Strengthen public debt management. - Strengthen public investment management to ensure gains from externally financed public investment projects are realized. - Continue improving the business environment to maintain and develop export potential over the medium and long term. *Source: 1kgzea2020001 - 1. The debt coverage is limited to state government debt (both central and local* ### 11. The authorities agreed with the overall assessment. They noted that the fiscal rule being ### 11. The authorities agreed with the overall assessment. They noted that the fiscal rule being ### Authorities' assessment - The authorities agreed with the overall assessment. - They noted that the fiscal rule being considered by Parliament will help keeping the overall public debt sustainable. ### External debt — historical and projections (2017–2040) - External debt (nominal): 81.1 76.5 76.4 87.5 84.5 82.8 81.5 79.8 78.6 73.0 74.7 81.3 79.1 - of which: public and publicly guaranteed (PPG): 53.0 47.0 45.5 56.5 53.5 51.8 50.5 48.9 47.6 42.0 43.8 50.5 48.1 - Change in external debt: -6.8 -4.6 -0.1 11.1 -3.0 -1.7 -1.3 -1.6 -1.2 -0.9 0.6 - Identified net debt-creating flows: -2.9 4.8 5.0 11.3 0.1 -1.0 -0.8 -0.8 -2.2 -1.4 -0.5 0.8 0.0 - Non-interest current account deficit: 5.5 11.4 8.5 13.8 9.3 6.8 6.6 6.5 6.3 6.4 6.4 11.0 7.5 - Deficit in balance of goods and services: 32.1 38.3 35.8 34.0 30.4 27.3 26.7 26.2 25.8 26.2 28.9 35.8 27.4 - Exports: 34.2 33.2 33.2 29.7 32.1 34.1 34.1 34.2 34.6 38.5 58.0 - Imports: 66.4 71.5 69.1 63.8 62.4 61.4 60.9 60.4 60.4 64.8 86.9 - Net current transfers (negative = inflow): -30.8 -29.3 -29.9 -23.2 -24.0 -23.5 -23.1 -22.6 -22.4 -22.3 -24.0 -29.2 -22.7 - of which: official: -1.4 -0.6 -1.4 0.0 -0.4 -0.4 -0.4 -0.4 -0.4 0.0 0.0 - Other current account flows (negative = net inflow): 4.2 2.4 2.7 3.0 2.9 3.1 3.0 2.9 2.9 2.5 1.5 4.4 2.8 - Net FDI (negative = inflow): 1.0 -1.7 -2.5 -2.9 -5.0 -5.1 -4.9 -4.8 -6.1 -5.6 -4.8 -6.3 -5.2 - Endogenous debt dynamics: -9.5 -4.9 -1.0 0.4 -4.2 -2.7 -2.5 -2.5 -2.4 -2.2 -2.2 - Contribution from nominal interest rate: 0.7 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.6 0.7 - Contribution from real GDP growth: -3.7 -2.6 -3.3 -0.3 -5.0 -3.4 -3.2 -3.2 -3.1 -2.8 -2.9 - Contribution from price and exchange rate changes: -6.5 -3.0 1.7 - Residual: -3.9 -9.4 -5.1 -0.2 -3.1 -0.8 -0.5 -0.8 1.0 0.5 1.1 -2.0 -0.3 - of which: exceptional financing: -0.5 -2.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ### External debt sustainability indicators - PV of PPG external debt-to-GDP ratio: 32.4 38.1 37.4 36.7 35.9 34.8 34.0 29.3 30.7 - PV of PPG external debt-to-exports ratio: 97.2 128.2 116.7 107.7 105.3 101.6 98.3 76.0 52.9 - PPG debt service-to-exports ratio: 6.1 14.4 -0.4 9.6 8.1 8.5 8.3 9.2 8.2 8.4 4.2 - PPG debt service-to-revenue ratio: 6.8 15.5 -0.4 10.4 9.1 9.8 9.5 10.5 9.3 10.7 8.1 - Gross external financing need (Million of U.S. dollars): 1049.9 1530.2 795.4 1473.4 958.3 831.3 869.4 1046.7 962.7 1667.6 2426.9 ### Key macroeconomic assumptions (exact series as presented) - Real GDP growth (in percent): 4.7 3.5 4.5 0.4 6.0 4.3 4.0 4.1 4.1 4.0 4.0 4.1 3.9 - GDP deflator in US dollar terms (change in percent): 7.9 3.8 -2.1 -5.2 0.1 1.3 1.9 1.9 1.9 1.0 -0.5 2.3 0.7 - Effective interest rate (percent): 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.8 0.9 - Growth of exports of G&S (US dollar terms, in percent): 7.7 4.1 2.6 -15.0 14.4 12.3 6.1 6.4 7.2 8.3 10.6 3.1 6.3 - Growth of imports of G&S (US dollar terms, in percent): 6.8 15.6 -1.2 -12.1 3.9 3.9 5.1 5.3 5.3 6.1 7.0 9.0 6.3 4.1 - Grant element of new public sector borrowing (in percent): 33.5 36.9 36.7 36.6 36.5 36.1 35.4 34.7 35.9 (presented intermittently) ### Aid and financing - Government revenues (excluding grants, in percent of GDP): 30.7 30.8 31.8 27.6 28.5 29.4 29.7 30.0 30.3 30.5 29.9 31.3 29.7 - Aid flows (in Million of US dollars): 195.6 137.4 190.1 347.4 290.3 248.0 258.3 267.1 275.9 282.4 405.8 - Grant-equivalent financing (in percent of GDP): 3.7 2.9 2.3 2.3 2.2 2.2 1.8 1.8 2.2 (presented intermittently) - Grant-equivalent financing (in percent of external financing): 41.3 55.8 48.8 48.9 48.8 48.2 42.9 42.9 46.1 (presented intermittently) - Nominal GDP (Million of US dollars): 7,703 8,271 8,455 8,052 8,546 9,026 9,568 10,149 10,768 13,872 22,113 - Nominal dollar GDP growth: 13.1 7.4 2.2 -4.8 6.1 5.6 6.0 6.1 6.1 5.0 3.5 6.5 4.6 ### Memorandum items (external) - PV of external debt: 63.4 69.1 68.4 67.7 66.9 65.8 64.9 60.3 61.7 - In percent of exports: 190.2 232.3 213.2 198.6 196.0 192.1 187.9 156.4 106.3 - Total external debt service-to-exports ratio: 20.7 26.5 10.3 24.8 21.4 21.8 21.7 25.4 25.3 29.1 16.0 - PV of PPG external debt (in Million of US dollars): 2737.9 3070.7 3197.9 3313.9 3437.3 3529.0 3656.8 4063.5 6789.9 - (PVt-PVt-1)/GDPt-1 (in percent): 3.9 1.6 1.4 1.4 1.0 1.3 0.7 1.4 ### Public sector debt — historical and projections (2017–2040) - Public sector debt: 58.8 54.8 54.8 61.0 65.9 64.8 64.0 62.9 61.9 60.9 59.6 59.7 55.5 61.8 - of which: external debt: 53.0 47.0 45.5 56.5 53.5 51.8 50.5 48.9 47.6 42.0 43.8 50.5 48.1 - Change in public sector debt: -0.3 -4.0 -0.7 11.8 -1.2 -0.8 -1.0 -1.0 -1.0 -0.2 0.7 - Identified debt-creating flows: -3.2 -5.7 -2.2 7.6 0.4 -0.9 -0.6 -0.6 -0.6 -0.1 -0.1 -0.4 0.4 - Primary deficit: 2.9 -0.4 -0.8 6.4 3.6 1.7 1.7 1.7 1.7 1.6 1.6 2.8 2.3 - Revenue and grants: 33.3 32.5 34.0 28.6 30.1 30.3 30.6 30.9 31.1 30.9 30.5 33.7 30.5 - of which: grants: 2.5 1.7 2.2 1.1 1.6 0.9 0.9 0.9 0.9 0.5 0.5 - Primary (noninterest) expenditure: 36.2 32.0 33.3 35.1 33.6 32.0 32.3 32.6 32.8 32.5 32.0 36.5 32.8 - Automatic debt dynamics: -5.7 -2.6 -1.4 1.1 -3.1 -2.6 -2.3 -2.3 -2.2 -1.7 -1.6 - Contribution from interest rate/growth differential: -2.8 -2.7 -3.5 1.1 -3.1 -2.6 -2.3 -2.3 -2.2 -1.7 -1.6 - of which: contribution from average real interest rate: -0.1 -0.8 -1.1 1.4 0.6 0.1 0.2 0.2 0.2 0.6 0.6 - of which: contribution from real GDP growth: -2.7 -2.0 -2.3 -0.2 -3.7 -2.7 -2.5 -2.5 -2.5 -2.3 -2.3 - Contribution from real exchange rate depreciation: -2.9 0.1 2.1 - Other identified debt-creating flows: -0.4 -2.7 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.3 0.0 - Privatization receipts (negative): 0.0 0.2 -0.1 0.0 - Debt relief (HIPC and other): -0.4 -2.9 0.0 0.0 - Residual: 2.9 1.8 1.5 4.2 -1.6 0.1 -0.4 -0.4 -0.5 -0.1 0.8 0.0 0.1 ### Public debt sustainability indicators - PV of public debt-to-GDP ratio: 41.0 49.6 49.6 49.4 48.9 48.4 47.7 47.3 47.4 - PV of public debt-to-revenue and grants ratio: 120.5 173.3 164.9 163.1 159.7 156.4 153.3 153.0 155.5 - Debt service-to-revenue and grants ratio: 6.3 14.7 -0.4 40.0 38.8 46.6 49.3 50.7 51.3 66.1 60.7 - Gross financing need: 4.6 1.7 -1.0 17.9 15.2 15.9 16.8 17.4 17.6 22.0 20.0 ### Public sector key macro-fiscal assumptions (exact series as presented) - Real GDP growth (in percent): 4.7 3.5 4.5 0.4 6.0 4.3 4.0 4.1 4.1 4.0 4.0 4.1 3.9 - Average nominal interest rate on external debt (in percent): 1.3 1.3 1.5 1.5 1.5 1.4 1.4 1.4 1.5 1.5 1.7 1.3 1.5 - Average real interest rate on domestic debt (in percent): -6.0 -3.6 0.8 -0.8 1.7 4.4 4.8 4.8 4.8 5.8 5.8 -6.4 4.4 - Real exchange rate depreciation (in percent, + indicates depreciation): -5.5 0.2 4.8 - Inflation rate (GDP deflator, in percent): 6.3 3.7 -0.8 9.6 8.1 5.3 5.0 5.0 5.0 4.0 4.0 7.2 5.3 - Growth of real primary spending (deflated by GDP deflator, in percent): -0.4 -8.3 8.5 5.9 1.6 -0.6 4.9 5.0 4.8 4.0 -0.1 4.0 3.7 - Primary deficit that stabilizes the debt-to-GDP ratio: 3.2 3.5 -0.1 -5.3 4.7 2.5 2.7 2.7 2.7 1.8 0.8 3.2 1.8 - PV of contingent liabilities (not included in public sector debt): 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ### Stress tests, sensitivity analysis, and alternative scenarios (high-level) - Table 3 and Table 4 present extensive sensitivity analysis for key indicators of public and publicly guaranteed external debt and public debt under alternative scenarios, bound tests (Real GDP growth, Primary balance, Exports, Other flows, Depreciation, Combination), and tailored tests (Combined contingent liabilities, Natural disaster, Commodity price, Market Financing). - Selected baseline PV of debt-to-GDP ratio (2020–2030 baseline series): 38 37 37 36 35 34 33 32 31 30 29 - Examples of sensitivity outputs (PV of debt-to-GDP, debt service-to-exports, PV of debt-to-exports, debt service-to-revenue) are tabulated across scenarios and years with threshold comparisons; bold values indicate breaches of thresholds. ### Figures and diagnostics (descriptive) - Figures show: - Indicators of Public and Publicly Guaranteed External Debt under Alternative Scenarios, 2020–2030. - Indicators of Public Debt Under Alternative Scenarios, 2020–2030. - Drivers of Debt Dynamics—Baseline Scenario. - Realism Tools comparing projected government and private investment and contributions to real GDP growth. ### Summary findings and implications - Baseline projections show elevated but manageable external and public debt ratios under assumptions provided. - Key vulnerabilities arise from large deficits in the balance of goods and services, reliance on transfers, negative net FDI inflows, and sensitivity to export shocks (as indicated by stress-test outcomes). - Maintaining fiscal discipline and implementing the fiscal rule under consideration are emphasized by the authorities as supportive of public debt sustainability. *Source: Country authorities; and staff estimates and projections.* ### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the ### 1kgzea2020001 - 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the ### Fiscal Adjustment and Possible Growth Paths - Title in source: "Fiscal Adjustment and Possible Growth Paths 1/" - Focus: distribution of 3-year adjustment in primary balance (percentage points of GDP). - Horizontal axis: "The size of 3-year adjustment from program inception is found on the horizontal axis;" - Vertical axis: "the percent of sample is found on the vertical axis." ### 3-Year Adjustment in Primary Balance (Percentage points of GDP) - Horizontal scale values (as printed): - "0 2 4 6 8 10 12 14" - "-4 .5-4 .0-3 .5" - "-3 .0-2 .5-2 .0-1 .5-1 .0-0 .5" - "0. 00. 51. 01. 52. 02. 53. 03. 54. 04. 55. 05. 56. 06. 57. 07. 58. 0 m or e" - Distribution note: "Distribution 1/ Pr ojec t ed 3-yr adjustment" - Classification statement: "3-year PB adjustment greater than 2.5 percentage points of GDP in approx. top quartile" ### Time series / Projection markers shown - Year markers and small-scale vertical axis values appearing in the figure: - "-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4" - "0 2 4 6 8 10 12" - "2014 2015 2016 2017 2018 2019 2020 2021" - "In percentage points of GDP" - Multiplier scenarios presented: - "Baseline" - "Multiplier = 0.2Multiplier = 0.4" - "Multiplier = 0.6Multiplier = 0.8" - Longer horizon projection axis values: - "0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30" - "2016 2017 2018 2019 2020 2021 2022 2023 2024 2025" - "0 1 1 2 2 3 3 4 4 5" - "H ist or i calProjected (Prev. DSA)Projected (Curr. DSA)" ### Figure 5 — Kyrgyz Republic: Qualification of the Moderate Category, 2020–2030 1/ - Country label: "KYRGYZ REPUBLIC" - Institutional label: "16 INTERNATIONAL MONETARY FUND" - Caption: "Figure 5. Kyrgyz Republic: Qualification of the Moderate Category, 2020–2030 1/" - Sources line in figure: "Sources: Country authorities; and staff estimates and projections." ### Thresholds and Space classifications (from figure text) - Space categories shown: - "Limited space" - "Some space" - "Substantial space" - Threshold notation and parameters: - "Threshold" - "Baseline" - "1/ For the PV debt/GDP and PV debt/exports thresholds, x is 20 percent and y is 40 percent. For debt service/Exports and debt service/revenue thresholds, x is 12 percent and y is 35 percent." - "(1-X)*Threshold (1-Y)*&Threshold" ### Debt and debt-service ratio series shown (axes and values) - Debt service-to-revenue ratio axis: - "0 5 10 15 20 25 2020 2022 2024 2026 2028 2030" - (Label) "Debt service-to-revenue ratio" - PV of debt-to-exports ratio axis: - "0 50 100 150 200 250 300 2020 2022 2024 2026 2028 2030" - (Label) "PV of debt-to-exports ratio" - PV of debt-to GDP ratio axis: - "0 10 20 30 40 50 60 2020 2022 2024 2026 2028 2030" - (Label) "PV of debt-to GDP ratio" - Debt service-to-exports ratio axis: - "0 5 10 15 20 25 2020 2022 2024 2026 2028 2030" - (Label) "Debt service-to-exports ratio" ### Key numeric and categorical items extracted verbatim - "3-year PB adjustment greater than 2.5 percentage points of GDP in approx. top quartile" - Multiplier values preserved exactly: "0.2", "0.4", "0.6", "0.8" - Threshold parameter values preserved exactly: "x is 20 percent", "y is 40 percent", "x is 12 percent", "y is 35 percent" *Sources: Country authorities; and staff estimates and projections.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1kgzea2020001.pdf_