IMF国际货币组织全球-Kyrgyz-Republic_Request-for-Purchase-Under-the-Rapid-Financing-Instrument-and-Disbursement-Under-the-Rapid-Credit-Facility_58页_862kb

IMF Country Report Summary: Kyrgyz Republic (March 2020)

Core Content

The Kyrgyz Republic requested emergency financial assistance under the IMF's Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF) to address the economic impact of the COVID-19 pandemic. The IMF Executive Board approved a disbursement of US$120.9 million (equivalent to SDR 59.2 million under RFI and SDR 29.6 million under RCF), marking the first global emergency loan under these instruments since the pandemic began.

The support is intended to:

• Address the balance of payments gap estimated at US$400 million.
• Catalyze donor support and preserve fiscal space for health-related expenditures.
• Provide a backstop to stabilize the economy and restore confidence.

Main Views

1. Economic Impact of the Pandemic

• The pandemic has significantly disrupted the Kyrgyz economy, with real GDP growth expected to slow to 0.4% in 2020.
• Headline inflation is projected to rise to 12%, while core inflation remains below the target range of 5–7%.
• The current account deficit is expected to widen to 14.5% of GDP in 2020.
• A balance of payments need of US$405 million is estimated for 2020, which could lead to a 3.5-month coverage of imports without IMF support.

2. Policy Adjustments

• Monetary and exchange rate policy should be data-dependent, with the central bank (NBKR) ready to provide liquidity and maintain flexibility in the exchange rate.
• The policy rate was raised to 5% in February 2020, but further easing may be necessary if inflationary pressures persist.
• Fiscal policy will see a temporary increase in the budget deficit to 7.8% of GDP in 2020, supported by donor financing.
• The fiscal deficit should be reduced to 3% of GDP in the medium term to ensure long-term sustainability.
• Health spending will be protected, with additional expenditures to be prioritized as the crisis evolves.

3. Financial Sector Resilience

• The banking sector is well capitalized and liquid, with an average capital adequacy ratio of 22% and a liquidity ratio of 69%.
• However, the dollarization of the economy exposes it to foreign exchange risk.
• The central bank should monitor exchange rate depreciation and manage capital and liquidity buffers to avoid further stress.
• Borrowers with unhedged US$ debt are particularly vulnerable, and the central bank should encourage debt restructuring for those affected by the crisis.

Key Information

• IMF Support: The US$120.9 million disbursement includes SDR 59.2 million (RFI) and SDR 29.6 million (RCF), representing 33% and 17% of the Kyrgyz Republic's quota, respectively.
• Debt Sustainability: The debt distress risk is assessed as moderate, with public debt expected to peak at 66% of GDP in 2020.
• Donor Financing: Donor support is crucial to close the balance of payments gap, and the IMF disbursement is expected to catalyze such support.
• Fiscal and Monetary Flexibility: Both monetary and fiscal policies need to be temporarily relaxed to absorb the crisis impact and support recovery.

Document Structure

1. Recent Economic Developments

• In 2019, the Kyrgyz Republic experienced positive economic growth at 4.5%, with a narrowed current account deficit at 9.3% of GDP.
• The KGS depreciated by 20% since the start of 2020, and the central bank sold $202 million in FX reserves.
• Remittances fell by 15% due to the drop in oil prices and border closures with China.

2. Impact of the Shock

• The balance of payments gap is expected to reach US$400 million in 2020.
• Real GDP growth is projected to slow to 0.4%, while inflation rises to 12%.
• Current account deficit is expected to widen to 14.5% of GDP, and public debt to reach 66% of GDP.

3. Policy Discussions

• Monetary policy should be data-dependent, with the central bank ready to provide liquidity.
• Exchange rate flexibility is encouraged to restore external balance.
• Fiscal loosening is appropriate to support health expenditures, with a focus on donor financing.
• Financial sector should use its capital and liquidity buffers to absorb losses, and the central bank should show flexibility in capital requirements if needed.

4. Access, Capacity to Repay, and Safeguards

• The access level is set at 50% of quota (SDR 88.8 million or US$123 million).
• Capacity to repay is considered adequate.
• Modalities include the use of donor financing and transparent collateral information.
• Safeguards focus on prudential rules, fiscal discipline, and debt sustainability.

Debt Sustainability and Fiscal Outlook

• The debt distress risk is moderate, and the capacity to repay is adequate.
• Long-term public debt is expected to remain around 60% of GDP if the deficit is reduced to 3% and donor financing is secured.
• The resilience of the economy to stress tests indicates sustainability even under more severe pandemic scenarios.

Conclusion

The Kyrgyz Republic's request for emergency financial assistance under the RFI and RCF reflects the severity of the pandemic's impact on its economy. The IMF support is critical in stabilizing the balance of payments, preserving fiscal space, and maintaining confidence. The policy recommendations emphasize flexibility, transparency, and coordinated donor support to ensure a smooth recovery and long-term economic stability.