Kyrgyz Republic needs ‘prudent macroeconomic policies’, says IMF

1 Nov 17

The IMF has called on the Kyrgyz Republic to adapt “prudent macroeconomic policies” and structural reforms to make growth more sustainable and inclusive. 

It said the country should improve public expenditure efficiency, by reforming public sector wages, reducing energy subsidies, strengthening targeted social programmes, implementing financial management reforms and adopting a credible fiscal rule.

The economy of the central Asian country is slowly recovering from external shocks such as lower oil prices and weaker regional environment but challenges remain, the IMF said.

After a consultation with Kyrgyz Republic, the IMF executive board urged the country to continue its efforts towards fiscal consolidation to bring debt down and strengthen the financial sector.

The concluding statement said: “They [the directors] emphasised the importance of continuing growth-friendly fiscal consolidation to ensure debt sustainability and to rebuild fiscal buffers.”

They also emphasised the importance of bringing in more revenue, such as through broadening the tax base and streamlining tax exemptions.

The Kyrgyz Republic’s economic expansion reached 6.0% in the first eight months of this year, up from no growth in the same period of 2016, the ADB said.

The country has experienced political and social instability since it gained independence in 1991.

The World Bank said the weak governance and entrenched corruption were major stress factors underlying political upheavals in 2005 and 2010. It also called the economy “vulnerable to external shocks”.

The bank also said in a country overview that the government was committed to improve governance at the national and local levels.

It called said “dramatic improvements” were required as corruption remains pervasive in the private sector. 

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