The International Monetary Fund (IMF) announced last week that a mission has reached a staff-level agreement with the Kyrgyz Republic on measures needed for the completion of the sixth and final review under a three-year extended credit arrangement.
The mission, led by Christian Beddies of the IMF's Middle Eastern and Central Asian Department, visited Bishkek from May 6-16.
The agreement requires approval by the IMF Executive Board, which is expected to complete the sixth review in late June. Upon approval, the IMF would make roughly $15 million available to the Kyrgyz Republic, bringing total disbursements under the arrangement to approximately $105 million.
"Economic performance in 2013 was very strong," Beddies said. "Growth reached 10.5 percent and was broad-based. The current account deficit declined in 2013, helped by the recovery in gold output and lower food and fuel prices. Twelve-month inflation dropped to four percent by [the end of 2013], and core inflation remained in single digits. The National Bank of the Kyrgyz Republic (NBKR) made significant strides toward modernizing the operational framework for monetary policy, which, if supported by continued prudent fiscal policy, should help keep inflation at bay."
Beddies said growth is expected to moderate to 4.4 percent in 2014 due to the slowdown in the region, while inflation is expected to increase due partly to depreciation pressures earlier this year.
Over the medium term, growth is expected to pick up and remain around five percent, while inflation is projected to stabilize at six percent.
"Structural reforms remain vital for enhancing the country's growth potential," Beddies said. "The mission urged the authorities to approve swiftly the Banking Code, Payments System Law, and Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) legislation currently in the parliament. Adopting this legislation would be a major step forward in developing the financial sector and enable it to support strong private sector-led growth."
He said the mission also encouraged the authorities to more quickly implement the broad range of reforms specified in the National Sustainable Development Strategy.
"The IMF stands ready to support the Kyrgyz Republic in its reform efforts and to continue the fruitful cooperation," Beddies said.
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