- Growth accelerated towards the end of 2016, reaching 3.8% with 0.5% deflation due in part to exchange rate appreciation of about 9% percent.
- Consolidation efforts should continue to meet the 2017 fiscal deficit target of 3% of GDP.
- The passage of the anti-money laundering and counter finance of terrorism law is vital for the stability of the financial sector.
An IMF mission led by Edward Gemayel visited Bishkek from February 9 to 15 to take stock of the latest economic developments, discuss progress on economic reforms, and prepare for the upcoming combined Article IV consultation and fourth review under the ECF programme planned for April. At the conclusion of the visit, Gemayel issued the following statement:
“With external pressures subsiding, economic indicators have improved, but the recovery remains modest. Growth accelerated towards the end of 2016, reaching 3.8% with 0.5% deflation due in part to exchange rate appreciation of about 9%. Despite a shortfall in tax revenue, the 2016 deficit was contained to 4.5% of GDP due to restrained spending on non-priority items and the rephasing of some investment projects.
“Consolidation efforts should continue to meet the 2017 fiscal deficit target of 3% of GDP. It is important to continue to implement revenue and expenditure measures announced last year, including the elimination of the value added tax (VAT) exemption on flour, rationalising the public sector wage bill, and streamlining spending on goods and services. Resisting spending pressures will be critical in the run up to the presidential election. Developing a credible and transparent fiscal rule will help maintain fiscal discipline."
Gemayel added, “The passage of the anti-money laundering and counter finance of terrorism (AML/CFT) law is vital for the stability of the financial sector. The law is necessary to keep the Kyrgyz Republic on the white list of the Eurasian Group on AMl/CFT. Failure to pass the law could lead to loss of correspondent banking relations and cut the financial sector off from the outside world.”
