The IMF Executive Board completed the fourth and fifth reviews within the expanded credit mechanism.
It is noted that the completion of the reviews allows to immediately pay the amount of about $ 26.9 million. Thus, the total amount of payments will reach about $ 80.7 million. In total, under the program,
After discussion in the Executive Board, Deputy Managing Director and Acting Chairman Tao Zhang noted that the Kyrgyz economy is showing signs of recovery, as the external environment is gradually improving.
Despite the fact that significant risks remain, the vulnerability of debt and the financial sector has declined.
At the same time, IMF experts state that the country’s authorities are committed to sound macroeconomic policies and implementation of structural reforms and consider them important for promoting higher growth and economic stability.
«Financial consolidation is still important for ensuring debt sustainability and should be aimed at increasing tax revenues. It’s about expanding the tax base and strengthening tax and customs administration,» Tao Zhang said.
In addition, it will be necessary to rationalize expenditures and reform the system of paying salaries from the state budget, reduce subsidies, improve the orientation toward social benefits and improve the structure of state investments.Tao Zhang
IMF recommended the National Bank to continue the policy of a bilateral flexible exchange rate and restrict interventions by conducting them only to smooth out the excessive volatility of KGS. To ensure an equal playing field, the NB of the KR should refrain from participating in the capital of banks or investment organizations. It also reminded of the need to amend the law on banks and banking activities to strengthen the independence of the National Bank.
The Kyrgyz authorities are urged to urgently resume the program of structural reforms, especially in the area of public financial management. This is necessary to improve the efficiency of the public sector.
«Despite the program faces important internal and external risks, including a slower regional recovery, a reduction in reforms and the deterioration of the relevant banking channels, the authorities remain firmly committed to its implementation and pursue policies that return to a broader and more inclusive growth on an ongoing basis,» the IMF concluded.