IMF Executive Board Completes the Third Review Under the Extended Credit Facility Arrangement for the Kyrgyz Republic
IMF News, December 15, 2016
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- Published: December 15, 2016
Board decision and financing
- On December 14, 2016, the Executive Board completed the third review of the Kyrgyz Republic’s economic performance under the three-year Extended Credit Facility (ECF) arrangement.
- The Board’s approval enables the immediate disbursement of SDR 9.514 million (about US$12.9 million).
- Total disbursements under the arrangement would rise to SDR 38.056 million (about US$51.5 million).
- The ECF arrangement was originally approved on April 8, 2015, for SDR 66.6 million (about US$92.4 million).
Assessment, risks, and policy recommendations
- Near-term outlook and risks:
- “While pressures on the economy are moderating, the near–term outlook remains challenging.”
- A subdued external environment and weak domestic demand are constraining growth prospects.
- Debt and financial sector vulnerabilities remain elevated.
- Program risks cited include dwindling commodity prices, protracted regional recovery, and policy slippages in the run-up to the 2017 presidential elections.
- Program implementation and conditionality:
- The Kyrgyz authorities delivered on most program commitments: all June quantitative performance criteria and indicative targets were met; all but two structural benchmarks were met.
- Fiscal policy recommendations:
- “A full commitment to growth-friendly fiscal consolidation envisaged under the program is critical to maintaining public finances on a sustainable path.”
- Consolidation should be underpinned by credible and permanent revenue and expenditure measures.
- Specific measures recommended: increasing tax revenues, reducing the wage bill, streamlining nonpriority spending, improving the public investment framework.
- Introducing a fiscal rule is recommended to support fiscal discipline.
- Monetary and exchange rate policy:
- The National Bank of the Kyrgyz Republic (NBKR) should continue a two-way flexible exchange rate policy and limit interventions to smoothing excessive som volatility.
- The planned gradual transition to inflation targeting is welcomed.
- Financial sector and legal framework:
- While the adopted Banking Law includes some improvements, the dropping of key provisions by Parliament and recent amendments weaken the Law.
- Further amendments to the Banking Law are needed to increase central bank independence, strengthen the resolution framework, and preserve financial sector stability in the current weak economic environment.
Key macroeconomic findings and projections (selected indicators, 2015–21)
- Nominal GDP (in billions of soms)
- 2015: 430.5
- 2016 Est.: 452.0
- 2017: 486.2
- 2018: 518.5
- 2019: 569.9
- 2020: 622.7
- 2021: 674.7
- Real GDP (growth in percent)
- 2015: 3.5
- 2016 Est.: 2.6
- 2017: 2.3
- 2018: 2.9
- 2019: 5.9
- 2020: 5.3
- 2021: 4.3
- Nongold real GDP (growth in percent)
- 2015: 4.5
- 2016 Est.: 2.4
- 2017: 2.8
- 2018: 3.9
- 2019: 5.0
- Consumer prices (12-month percent change, eop)
- 2015: 3.4
- 2016 Est.: 1.5
- 2017: 4.7
- 2018: 5.5
- 2019: 5.2
- 2020: 5.1
- Consumer prices (12-month percent change, average)
- 2015: 6.5
- 2016 Est.: 0.8
- General government finances (in percent of GDP) 1/
- Revenue
- 2015: 35.6
- 2016 Est.: 38.0
- 2017: 36.3
- 2018: 35.4
- 2019: 35.1
- 2020: 35.0
- 2021: 35.2
- Of which: Tax revenue
- 2015: 19.1
- 2016 Est.: 21.6
- 2017: 21.9
- 2018: 22.1
- 2019: 22.3
- 2020: 22.5
- 2021: 22.7
- Expense
- 2015: 30.1
- 2016 Est.: 32.5
- 2017: 30.5
- 2018: 29.7
- 2019: 29.3
- 2020: 28.9
- Gross operating balance
- 2015: 5.7
- 2016 Est.: 5.8
- 2017: 6.1
- 2018: 6.3
- Net acquisition of nonfinancial assets
- 2015: 6.6
- 2016 Est.: 10.0
- 2017: 8.7
- 2018: 7.2
- 2019: 7.3
- 2020: 7.6
- 2021: 7.8
- Overall balance (net lending/borrowing)
- 2015: -1.2
- 2016 Est.: -4.5
- 2017: -3.0
- 2018: -1.6
- 2019: -1.5
- Overall balance including onlending
- 2015: -3.2
- 2016 Est.: -7.9
- 2017: -6.2
- 2018: -4.0
- Total public debt 2/
- 2015: 65.0
- 2016 Est.: 62.1
- 2017: 64.2
- 2018: 65.5
- 2019: 62.0
- 2020: 60.3
- Banking sector
- Reserve money (percent change, eop)
- 2015: 4.0
- 2016 Est.: 27.7
- 2017: 9.7
- 2018: 9.3
- 2019: 8.6
- 2020: 8.1
- Broad money (percent change, eop)
- 2015: 14.9
- 2016 Est.: 16.1
- 2017: 12.5
- 2018: 10.9
- 2019: 10.8
- 2020: 8.8
- Credit to private sector (percent change, eop)
- 2015: 17.2
- 2016 Est.: 11.2
- 2017: 14.1
- 2018: 14.4
- 2019: 11.4
- 2020: 10.4
- Credit to private sector (in percent of GDP)
- 2015: 22.4
- 2016 Est.: 23.9
- 2017: 24.9
- 2018: 25.4
- 2019: 25.8
- External sector
- Current account balance (in percent of GDP)
- 2015: -10.9
- 2016 Est.: -10.0
- 2017: -13.6
- 2018: -13.8
- 2019: -11.9
- 2020: -11.7
- 2021: -11.5
- Export growth (percent change)
- 2015: -21.5
- 2016 Est.: -0.1
- 2017: 6.0
- 2018: 5.6
- 2019: 14.3
- 2020: 10.3
- Import growth (percent change)
- 2015: -27.1
- 2016 Est.: 4.2
- Gross International reserves (in millions of U.S. dollars)
- 2015: 1,468
- 2016 Est.: 1,680
- 2017: 1,745
- 2018: 1,856
- 2019: 2,069
- 2020: 2,196
- 2021: 2,320
- Gross reserves (months of next year imports, eop)
- 2015: 3.7
- 2016 Est.: 3.8
- 2017: 4.1
- External public debt outstanding (in percent of GDP)
- 2015: 63.6
- 2016 Est.: 60.7
- 2017: 63.0
- 2018: 64.4
- 2019: 63.1
- 2020: 61.1
- 2021: 59.4
IMF Press Release No. 16/559 (December 14, 2016), IMF Communications Department.