IMF commends Kyrgyz Republic’s economic growth amid challenges
BISHKEK — In a recent Article IV consultation, an International Monetary Fund (IMF) delegation led by Mr. Nikoloz Gigineishvili has acknowledged the strong economic performance of the Kyrgyz Republic, despite regional difficulties. The consultation, which took place from November 9 to November 22 in Bishkek, highlighted a robust economic growth of 6.3% in 2022, with public debt reduced to 49% of GDP.
Although inflation rates have decreased from last year’s high, they remain elevated at 9.2%. The IMF pointed out a significant current account deficit, largely due to a 26% increase in non-oil imports and the suspension of gold exports, which have traditionally been a major source of revenue for the country. In response to these challenges, the IMF recommended that fiscal policies should focus on creating additional space by reducing inefficient tax exemptions and improving VAT collection processes. This advice comes as a precaution against potential future declines if no new measures are introduced.
Additionally, the IMF emphasized the importance of structural reforms for ensuring medium-term economic stability. The expected growth rate is projected to stay at around 4%, with a gradual reduction in inflation levels reaching mid-single digits. The suggested reforms include governance improvements, better management of state-owned enterprises, increased market competition, modernization of the electricity sector, and strengthened social safety nets—all crucial steps for unlocking concessional external financing opportunities.
The stability of the banking sector was also highlighted as an area that requires ongoing supervisory attention due to the heightened uncertainty that could lead to an increase in non-performing loans if economic expansion slows down.
