IMF国际货币组织全球-Kyrgyz-Republic_2019-Article-IV-Consultation_81页_2mb

Kyrgyz Republic: 2019 Article IV Consultation Summary

Core Content

The 2019 Article IV consultation with the Kyrgyz Republic, conducted by the International Monetary Fund (IMF), assessed the country's macroeconomic and financial stability, fiscal and monetary policies, and structural reforms. The consultation concluded that the economy had experienced moderate growth in 2018 (3.5%) and was expected to grow slightly in 2019, driven by gold production and fiscal expansion. However, risks were tilted to the downside due to trade tensions and the economy's dependence on external factors.

The Kyrgyz Republic has been on a path of macroeconomic stabilization, supported by eight consecutive Fund programs. Despite this, the economy remains vulnerable to external shocks, primarily due to high reliance on remittances (29% of GDP), gold exports (37% of goods exports), and foreign currency-denominated public debt (79% of total public debt). The current account deficit also remained high at 8.7% of GDP.

Main Views and Key Information

Economic Performance

• Growth: Real GDP growth in 2018 was 3.5%, with nongold real GDP growth at 3.7%. The economy is projected to grow at around 4% in the medium term.
• Inflation: Core inflation decreased to 2.9% in 2018, and headline inflation averaged 1.5% due to lower food prices.
• Fiscal Deficit: The general government deficit declined to 1.3% of GDP in 2018, mainly due to reduced spending on investment and goods and services. However, it remained above the desired level.
• Public Debt: Total public debt was 56% of GDP in 2018, with a significant portion (4/5) in foreign currency.
• Current Account Deficit: The current account deficit widened to 8.7% of GDP in 2018, but gross official foreign exchange reserves remained adequate at four months of imports.

Monetary Policy

• The National Bank of the Kyrgyz Republic (NBKR) maintained a moderate monetary policy stance, reducing the policy rate from 5.0% in 2018 to 4.5% in 2019.
• Excess liquidity and dollarization were reduced, with the share of foreign exchange deposits and loans in total deposits and loans decreasing by about one-third over three years.
• The NBKR was urged to maintain two-way exchange rate flexibility and limit interventions to smooth excessive fluctuations.

Structural Reforms

• Fiscal Reforms: The IMF recommended reducing tax exemptions, the high public-sector wage bill, and energy sector subsidies to create fiscal space for development. Strengthening public financial management was also emphasized.
• Banking Sector Reforms: The NBKR was encouraged to transfer the recently acquired problem bank to the state to eliminate conflicts of interest and improve focus on monetary policy and supervision.
• Financial Inclusion: Improving financial sector development, energy sector efficiency, and governance were highlighted as priorities. Gradual tariff increases and cash transfers to the poor were proposed to support the energy sector.

External Sector

• The external position weakened in 2018, with the current account deficit increasing to 8.7% of GDP.
• The Kyrgyz tenge (KGS) remained stable against the dollar, supported by significant and transparent foreign exchange interventions.
• The IMF noted that the external position was weaker than implied by fundamentals and policy settings, but reserves were still adequate.

Key Recommendations

• Fiscal Policy: Maintain a general government deficit below 2.5% of GDP from 2020 onward to ensure long-term sustainability and build fiscal buffers.
• Monetary Policy: Continue with exchange rate flexibility and support the transition to inflation targeting.
• Banking Sector: Transfer the problem bank to the state to avoid conflicts of interest and improve financial stability.
• Structural Reforms: Implement reforms to enhance financial sector development, restructure the energy sector, and improve governance and the rule of law.
• Poverty Reduction: Address the stalled progress in poverty reduction by improving public services and targeting social transfers.

Additional Notes

• The consultation emphasized the need for continued stability-oriented policies and reforms to create buffers against external shocks and support inclusive growth.
• The IMF stressed the importance of addressing constraints such as low quality of education, onerous regulations, and poor governance.
• The next Article IV consultation with the Kyrgyz Republic is expected to be held on the standard 12-month cycle.

Tables and Figures Overview

• Selected Economic Indicators (2016–2024): Includes GDP, inflation, fiscal balance, and public debt.
• General Government Finances (2017–2018): Revenue and expenditure trends, showing a decline in the general government deficit.
• Bank Stress Tests (June 2018): Results indicate the banking system's resilience to shocks but low profitability.
• Monetary Aggregates and Credit (2015–2018): Highlights trends in nominal and real effective exchange rates, and credit growth.

Conclusion

The IMF concluded that the Kyrgyz Republic has made progress in macroeconomic and financial stability but needs to address structural vulnerabilities and implement further reforms to ensure sustainable growth and resilience to external shocks. The consultation emphasized the importance of fiscal discipline, monetary policy flexibility, and structural improvements in the financial and energy sectors.