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KYRGYZSTAN AND THE IMF

Membership

The Kyrgyz Republic (Kyrgyzstan) became a member of the International Monetary Fund on May 8, 1992, with an initial quota of SDR 43 million (about US$59 million). In 1995 Kyrgyzstan’s quota was increased to SDR 64.5 million (about US$96 million) and in 1999 to SDR 88.8 million (about US$115 million).
The Kyrgyz Republic accepted the obligations of Article VIII of the IMF Articles of Agreement in March 1995. Under these obligations the Kyrgyz Republic undertakes to refrain from imposing exchange rate restrictions on the making of payments and transfers for current international transactions or from engaging in discriminatory currency arrangements or multiple currency practices without IMF approval.
The Kyrgyz Republic’s Governor for the IMF is Mr. Marat Alapaev, the Chairman of the National Bank of the Kyrgyz Republic; the Associate Governor is Mr. Kurmanbek Ukulov, Head of Economic Policy Department at the Administration of the President of the Kyrgyz Republic. Kyrgyzstan’s Executive Director in the IMF is Mr. Thomas Moser (Switzerland), and his constituency also includes Azerbaijan, Poland, Switzerland, Tajikistan, Turkmenistan, Uzbekistan, and Serbia and Montenegro.

IMF Lending

Since the break-up of the Soviet Union, the IMF has actively supported the ongoing transition to a market economy in all of the former Soviet Union (FSU) countries. The Kyrgyz Republic has received financial support under a number of different facilities. Assistance in the initial years was provided under the Stand-by and the Systemic Transformation Facility (STF) to counter strong inflationary pressures, deterioration in the balance of payments, and the collapse of output. However, since July 1994 the Kyrgyz Republic has been implementing medium-term adjustment programs. The government’s efforts have been supported first, under the enhanced structural adjustment facility (ESAF), and more recently, under the poverty reduction and growth facility (PRGF).

Financial Arrangements

Total Fund credit and loans outstanding as of April 30, 2007 amounted to SDR 102.31 million.

The IMF loans aim at achieving the stabilization of the balance of payments, the reduction of inflation, a stable fiscal position, the prudent management of external debt, a sound banking system, and improvements in governance. Program targets under IMF loans include floors on the accumulation of international reserves and limits on the domestic assets of the National Bank of Kyrgyz Republic, limits on tax collection and on the size of the fiscal deficit of the Kyrgyz Government. The IMF also requires that the Kyrgyz Government not accumulate arrears on external debt and social spending obligations.

IMF Technical Assistance

Technical assistance is a key aspect of the IMF’s support for the government’s reform agenda. In the initial years after independence, long-term technical advisors made an important contribution to improving the quality of statistics, the tax system, and central banking. Their efforts were supplemented by a number of short-term technical assistance missions from headquarters in Washington. In recent years, the Fund’s technical assistance has been mostly directed to strengthening the banking system and improving the debt monitoring capabilities of the country. Thus, Fund technical assistance has complemented the focus of the economic programs agreed between the government and the Fund.
The Fund also actively supports capacity building in the Kyrgyz Republic through training courses for government officials, parliamentarians, and for members of the press, organized in Washington D.C., USA and Vienna, Austria, as well as in regional training courses. These courses are aimed at exposing participants to the best practice techniques in the areas of macroeconomic analysis, fiscal and financial analysis, and the compilation of statistics.

IMF Resident Representative Office

The IMF has maintained a presence in the Kyrgyz Republic since September 1992, at which time its Resident Representative office, located in the National Bank, was established. The role of the office is to foster good working relations between the Kyrgyz authorities and the IMF, to monitor and analyze economic and political developments in the Kyrgyz Republic, assist the authorities in implementing macroeconomic and structural reform measures consistent with IMF-supported programs, and to support the implementation of IMF technical assistance. The Resident Representative office also plays a key role in the Fund’s support of the government’s poverty reduction efforts. The Fund believes that all stakeholders must be heard from in formulating the poverty alleviation strategy. Thus, an important responsibility of the Resident Representative office is to maintain close contacts with civil society and seek to build broad support for sound macroeconomic policies and structural reform measures. The Resident Representative office is also engaged in maintaining close contacts with multilateral institutions and bilateral donors to facilitate coordination of policy advice and technical assistance.

From August 2006 IMF’s Resident Representative in the Kyrgyz Republic has been Mr. James McHugh.

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