2011年-IMF国际货币组织全球_Kyrgyz_Republic_Selected_Issues_20页_555kb

Kyrgyz Republic: Selected Issues Summary

Core Content

This document is a Selected Issues paper prepared by the International Monetary Fund (IMF) for the Kyrgyz Republic, focusing on three main areas: Banking Sector Performance During the Crisis and Challenges Ahead, Exchange Rate Assessment, and International Reserve Adequacy. The paper was completed on June 2, 2011, and provides an analysis of the financial sector's response to the political crisis of 2010, the impact of external shocks on the exchange rate, and the adequacy of the country's international reserves.

Main Viewpoints

I. Banking Sector Performance During the Crisis and Challenges Ahead

• The political crisis in April 2010 led to a US$240 million deposit outflow, prompting the temporary administration of seven banks, including the largest, Asia Universal Bank (AUB).
• The crisis exposed weaknesses in the legal framework, as the National Bank of the Kyrgyz Republic (NBKR) faced external pressures and litigation risks, which hindered its supervisory independence.
• AUB was found to be insolvent and was nationalized in June 2010. It was split into a "good bank" (Zalkar Bank) and a "bad bank" (AUB), with Zalkar receiving most of the assets and liabilities.
• The banking sector has become more balanced, with several banks now holding a 10–20% share of system assets, private deposits, and loans.
• The largest state-owned bank has grown rapidly, raising concerns about political influence and lending standards.
• The NBKR's supervisory function has been weakened due to staff shortages, low pay, and over-politicized budget processes.

II. Exchange Rate Assessment

• The Kyrgyz Republic is a small open economy, vulnerable to external shocks.
• The nominal exchange rate flexibility has helped maintain external competitiveness and align the real exchange rate (REER) with fundamentals.
• The real exchange rate has remained broadly stable despite external shocks, as shown by econometric assessments.
• The real effective exchange rate (REER) was slightly undervalued according to the macroeconomic balance and external sustainability approaches, but slightly overvalued according to the equilibrium real exchange rate approach.
• The exchange rate policy should be monitored closely to ensure it adjusts to changing fundamentals, especially volatile import prices.

III. International Reserve Adequacy in the Kyrgyz Republic

• Gross international reserves (GIR) have increased more than six-fold since 2001, but do not meet new adequacy metrics for low-income countries (LICs).
• Despite strong reserve accumulation, the small open economy nature of Kyrgyz Republic makes it vulnerable to exogenous shocks.
• The reserve adequacy is adequate under conventional indicators, but insufficient under new metrics.
• Scenario analysis indicates that the current reserves may not be sufficient to absorb country-specific shocks.

Key Information

• AUB's insolvency was confirmed in October 2010, leading to its split into Zalkar (good bank) and AUB (bad bank).
• The NBKR faces legal and political challenges, including litigation risks, inadequate legal protection for staff, and politicized budget processes.
• Zalkar Bank is expected to be privatized or liquidated based on its solvency assessment.
• The real exchange rate is slightly undervalued, but nominal flexibility has supported external competitiveness.
• The banking code should be reformed to strengthen NBKR's powers and limit judicial review of its actions.
• Supervisory measures are needed to control the growth of the largest state-owned bank and rebuild NBKR's credibility.

Recommendations

• Rebuild NBKR's credibility and authority by appointing a full-term chairperson and ensuring sufficient resources for staff recruitment and retention.
• Resolve Zalkar Bank in line with international best practices, either through privatization or liquidation.
• Reform the legal framework to streamline bank resolution laws and enhance supervisory independence.
• Improve the business climate to increase external competitiveness.
• Monitor the exchange rate closely and adjust it to changing fundamentals.
• Ensure reserve adequacy by addressing new metrics and enhancing resilience to external shocks.