IMF Survey: IMF to Step Up Its Engagement, Support in Central Asia

IMF News, June 22, 2009

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Managing Director Dominique Strauss-Kahn assured 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.
Engagement objectives:
- Provide continuing technical assistance and financial support to raise the region’s growth potential.
- Help the poorest and most vulnerable groups of the population.
Public messaging:
- Strauss-Kahn urged governments to rebuild social safety nets and introduced the concept of "social conditionality" to ensure social programs take into account the needs of the poor and most vulnerable.
Outreach:
- Strauss-Kahn conducted a four-country tour and delivered a public lecture at the Government Academy in Kazakhstan during a five-day visit to the region.

Growth forecast and exposure:
- 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, according to the IMF 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.
Kazakhstan-specific issues:
- Kazakhstan has a large share of private external financing in the banking sector and is facing difficulties meeting its external debt rollover needs.
- Strauss-Kahn offered to provide IMF technical assistance to support restructuring plans to strengthen banks and restore confidence in the system.
- Policy emphasis: "putting the banking system on a sounder and more sustainable footing will require more reliance on domestic deposits rather than on external financing."

Remittances and social pressure:
- 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.
- Declining remittances and returning migrants due to reduced work in host countries are contributing to additional pressure on social spending.
Field engagement:
- In Tajikistan, Strauss-Kahn visited the village of Shainaki Chinor in Rudaki Rayon to discuss impacts with migrant workers and nongovernmental organization representatives.

Visits and meetings:
- Strauss-Kahn visited Kazakhstan, Tajikistan, the Kyrgyz Republic, and the Republic of Uzbekistan during the trip.
- Photographic references in the source note meetings with President Kurmanbek Bakiev in Bishkek on June 17 and a visit to Shainaki Chinor, Tajikistan on June 16 during the five-day Central Asian tour.

IMF Survey: IMF to Step Up Its Engagement, Support in Central Asia — June 22, 2009