{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Kyrgyz Republic",
  "publication": "IMF News, March 4, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/03/04/pr2468-kyrgyz-republic-imf-executive-board-concludes-2023-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the 2023 Article IV consultation with the Kyrgyz Republic and considered and endorsed the staff appraisal on a meeting on February 5, 2024.",
  "publishDate": "2024-03-04",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board concluded the 2023 Article IV consultation with the Kyrgyz Republic and considered and endorsed the staff appraisal at a meeting on February 5, 2024.\n- Press Release No. 24/68. Date on page: March 4, 2024.\n- The Kyrgyz economy grew strongly in 2023, led by construction and trade. Tax revenue mobilization improved, and public debt declined.\n- Headline inflation fell from 14.7 percent in December 2022 to 7.3 percent in December 2023, supported by a marked reduction in food and fuel inflation; core inflation remained elevated due to demand pressures.\n- The official current account deficit remained significant because of the decline in net remittance inflows, lower gold exports, and unrecorded re-exports."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Medium-term expectations:\n  - Output is expected to grow at its potential rate of 4 percent in the medium term.\n  - Inflation is expected to decline to mid-single digits.\n  - Public debt is expected to remain contained.\n- External accounts:\n  - The current account deficit should narrow to more sustainable levels provided exports of gold production fully resume and re-exports are reflected in external accounts.\n- Main downside risk:\n  - A further escalation of the war in Ukraine and secondary sanctions that could weaken the Russian economy, reduce remittances and trade, and thereby reduce growth and fiscal revenue.\n- Directors noted other substantial risks, including geoeconomic fragmentation and climate change."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors agreed with the thrust of the staff appraisal and welcomed the strong recovery and steps taken to preserve macroeconomic stability.\n- Fiscal policy:\n  - Welcome strong fiscal discipline and revenue performance that contained the fiscal deficit and reduced debt.\n  - Emphasized need for continued consolidation to strengthen debt sustainability while creating space for priority development and social spending.\n  - Encouraged efforts to sustainably increase revenues by streamlining tax exemptions and special tax regimes and further strengthening revenue administration.\n  - Recommended measures to contain the wage bill and reduce energy subsidies.\n- Monetary and financial policy:\n  - Underscored need for tight monetary policy to durably reduce inflation and for measures to improve the effectiveness of monetary policy.\n  - Highlighted that discontinuing central bank purchases of domestically produced gold would help to contain liquidity injections.\n  - Stressed need to strengthen the autonomy and governance of the central bank by implementing the remaining Safeguards Assessment recommendations.\n  - Encouraged greater exchange rate flexibility to buttress competitiveness and safeguard reserves.\n  - Welcomed authorities’ commitment to improving balance of payments statistics and noted the important role of Fund technical assistance.\n  - While the banking sector remains sound, Directors encouraged continued vigilance given risks related to nonperforming loans and increased foreign exchange exposures.\n- Structural reforms and governance:\n  - Called for ambitious reforms to support higher and more inclusive growth.\n  - Priorities: strengthening governance (including management and privatization of state-owned enterprises), enhancing competition, reforming the electricity sector, and strengthening social safety nets.\n  - Recommended anticorruption efforts, enhancing transparency, and strengthening the AML/CFT framework.\n  - Noted that energy sector reform and governance improvements would help improve resource allocation efficiency, mitigate climate and geoeconomic risks, and catalyze external concessional financing."
    },
    {
      "heading": "Selected social and economic indicators (highlights)",
      "content": "- Social and demographic indicators:\n  - Population (in millions, 2022): 7.0\n  - GINI Index (2020): 0.29\n  - Unemployment rate (ILO estimate, in percent, 2022): 4.6\n  - Life Expectancy at birth in years (2021): 72\n  - Poverty rate (in percent, national definition, 2021): 33\n  - Adult literacy rate (percent of popul., 2019): 100\n  - Per capita GDP (World Bank, in million U.S. dollars, 2022): 1,655\n  - Under-five mortality (per 1000 live births, 2021): 17.4\n- Real and nominal output (selected years):\n  - Nominal GDP (in billions of soms): 2019: 654; 2020: 640; 2021: 783; 2022: 971; 2023: 1,134; 2024: 1,286; 2025: 1,429; 2026: 1,568; 2027: 1,708; 2028: 1,847\n  - Nominal GDP (in millions of U.S. dollars): 2019: 9,372; 2020: 8,283; 2021: 9,256; 2022: 11,672; 2023: 12,782; 2024: 13,791; 2025: 14,873; 2026: 15,842; 2027: 16,752; 2028: 17,594\n  - Real GDP (growth in percent): 2019: -7.0; 2020: 5.5; 2021: 6.3; 2022: 4.2; 2023: 4.4; 2024: 4.0\n  - Nongold real GDP (growth in percent): 2019: 4.1; 2020: -7.5; 2021: 5.9; 2022: 5.2; 2023: 4.5; 2024: 4.3\n  - GDP per capita (in U.S. dollars): 2019: 1,467; 2020: 1,271; 2021: 1,391; 2022: 1,718; 2023: 1,844; 2024: 1,949; 2025: 2,058; 2026: 2,149; 2027: 2,226; 2028: 2,289\n- Inflation:\n  - Consumer prices (12-month percent change, eop): 2019: 3.1; 2020: 9.7; 2021: 11.2; 2022: 14.7; 2023: 10.0; 2024: 8.0\n  - Consumer prices (12-month percent change, average): 2019: 1.1; 2020: 11.9; 2021: 13.9; 2022: 11.7; 2023: 8.6; 2024: 6.6; 2025: 4.8\n- General government finances (in percent of GDP):\n  - Revenue: 2019: 30.8; 2020: 29.0; 2021: 31.4; 2022: 36.5; 2023: 38.5; 2024: 36.0; 2025: 35.2; 2026: 34.6; 2027: 34.2; 2028: 33.9\n  - Of which: Tax revenue: 2019: 18.6; 2020: 16.4; 2021: 18.9; 2022: 23.4; 2023: 25.5; 2024: 25.2; 2025: 24.6; 2026: 24.1; 2027: 23.8; 2028: 23.7\n  - Expense (selected years): 2019: 25.9; 2020: 28.2; 2021: 26.1; 2022: 27.8; 2023: 30.3; 2024: 29.3; 2025: 29.1; 2026: 28.9\n  - Gross operating balance: 2019: 4.9; 2020: 0.8; 2021: 5.3; 2022: 8.7; 2023: 8.2; 2024: 6.8; 2025: 6.1; 2026: 5.6\n  - Net acquisition of nonfinancial assets: 2019: 3.9; 2020: 6.0; 2021: 9.0; 2022: 8.1; 2023: 8.4; 2024: 7.8; 2025: 7.9\n  - Overall balance (net lending/ borrowing) 2/: 2019: -0.1; 2020: -3.1; 2021: -0.7; 2022: -0.3; 2023: 0.1; 2024: -1.6; 2025: -1.7; 2026: -2.2; 2027: -2.6; 2028: -2.9\n  - Primary net lending/ borrowing: 2019: -2.1; 2020: 0.0; 2021: -0.5; 2022: -0.6; 2023: -0.9; 2024: -1.2; 2025: -1.3\n  - Total state government debt 3/: 2019: 48.8; 2020: 63.6; 2021: 56.2; 2022: 49.2; 2023: 46.9; 2024: 44.3; 2025: 42.7; 2026: 42.1; 2027: 42.2; 2028: 42.9\n  - Of which domestic debt: 2019: 9.2; 2020: 9.5; 2021: 9.8; 2022: 10.2; 2023: 11.5; 2024: 13.2; 2025: 14.9\n- Monetary sector (selected):\n  - Reserve money (percent change, eop): 2019: 11.0; 2020: 24.8; 2021: 6.5; 2022: 44.9; 2023: 3.0; 2024: 7.1\n  - Broad money (percent change, eop): 2019: 12.8; 2020: 23.9; 2021: 19.1; 2022: 30.6; 2023: 18.4; 2024: 10.8\n  - Credit to private sector (percent change, eop): 2019: 12.6; 2020: 11.4; 2021: 21.5; 2022: 14.1\n  - Credit to private sector (in percent of GDP): 2019: 22.9; 2020: 26.4; 2021: 21.7; 2022: 22.5; 2023: 22.6\n  - Velocity of broad money 4/: 2019: 2.8; 2020: 2.2; 2021: 2.3\n  - Policy Rate: 2019: 5.0; 2020: 13.0\n- External sector (selected):\n  - Current account balance (in percent of GDP): 2019: -11.5; 2020: -8.0; 2021: -43.6; 2022: -31.8; 2023: -9.7; 2024: -7.9; 2025: -5.9; 2026: -5.0\n  - Export of goods and services (in millions of U.S. dollars): 2019: 3,126; 2020: 2,444; 2021: 3,301; 2022: 3,564; 2023: 6,672; 2024: 9,598; 2025: 10,212; 2026: 10,575; 2027: 10,783; 2028: 10,903\n  - Export growth (percent change): 2019: 13.8; 2020: -21.8; 2021: 35.1; 2022: 87.2; 2023: 43.9; 2024: 6.4; 2025: 3.6; 2026: 2.0\n  - Import of goods and services (in millions of U.S. dollars): 2019: 5,690; 2020: 4,060; 2021: 5,938; 2022: 10,497; 2023: 11,989; 2024: 12,434; 2025: 13,017; 2026: 13,328; 2027: 13,641; 2028: 14,036\n  - Import growth (percent change): 2019: -3.8; 2020: -28.7; 2021: 46.3; 2022: 76.8; 2023: 14.2; 2024: 3.7; 2025: 4.7; 2026: 2.4; 2027: 2.9\n  - Gross International reserves (in millions of U.S. dollars) 5/: 2019: 2,176; 2020: 2,628; 2021: 2,779; 2022: 2,633; 2023: 2,953; 2024: 2,584; 2025: 2,311; 2026: 2,185; 2027: 2,167\n  - Gross reserves (months of next year imports, eop): 2019: 3.2; 2020: 2.6; 2021: 2.1; 2022: 1.9; 2023: 1.8\n  - Gross reserves (months of next year imports adjusted for re-exports, eop): 2019: 3.8; 2020: 2.7; 2021: 2.5\n  - External public debt outstanding (in percent of GDP): 2019: 41.0; 2020: 54.5; 2021: 46.7; 2022: 39.5; 2023: 37.1; 2024: 34.4; 2025: 32.5; 2026: 28.0\n  - External public debt service-to-export ratio (in percent): 2019: 7.3; 2020: 6.2\n- Memorandum items:\n  - Exchange rate (soms per U.S. dollar, average): 2019: 69.8; 2020: 77.4; 2021: 84.7; 2022: 83.2\n  - Real effective exchange rate (2010=100) (average): 2019: 99.9; 2020: 95.8; 2021: 95.2; 2022: 105.8\n\nSource: IMF Executive Board concluding statement and staff appraisal (Press Release No. 24/68).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Kyrgyz Republic and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/03/04/pr2468-kyrgyz-republic-imf-executive-board-concludes-2023-article-iv-consultation"
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    "Published: March 4, 2024",
    "The Executive Board concluded the 2023 Article IV consultation with the Kyrgyz Republic and considered and endorsed the staff appraisal at a meeting on February 5, 2024.",
    "Press Release No. 24/68. Date on page: March 4, 2024.",
    "The Kyrgyz economy grew strongly in 2023, led by construction and trade. Tax revenue mobilization improved, and public debt declined.",
    "Headline inflation fell from 14.7 percent in December 2022 to 7.3 percent in December 2023, supported by a marked reduction in food and fuel inflation; core inflation remained elevated due to demand pressures.",
    "The official current account deficit remained significant because of the decline in net remittance inflows, lower gold exports, and unrecorded re-exports.",
    "Medium-term expectations:",
    "External accounts:",
    "Main downside risk:",
    "Directors noted other substantial risks, including geoeconomic fragmentation and climate change.",
    "Directors agreed with the thrust of the staff appraisal and welcomed the strong recovery and steps taken to preserve macroeconomic stability.",
    "Fiscal policy:",
    "Monetary and financial policy:",
    "Structural reforms and governance:",
    "Social and demographic indicators:",
    "Real and nominal output (selected years):",
    "Inflation:",
    "General government finances (in percent of GDP):",
    "Monetary sector (selected):",
    "External sector (selected):",
    "Memorandum items:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Kyrgyz Republic and the IMF](http://www.imf.org/external/country/KGZ/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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