Press Release No. 13/268

Press Release: Statement at the Conclusion of an IMF Staff Mission to the Kyrgyz Republic

July 18, 2013

An International Monetary Fund (IMF) team, led by Mr. Christian Beddies, visited Bishkek July 8–11, 2013 to discuss the country’s current economic situation with the Kyrgyz authorities. This interim visit by the Fund mission took place ahead of discussions for the fifth review scheduled for September 2013 and followed the completion of the fourth review of the Extended Credit Facility (ECF) program in June 2013. The mission also participated in the July 10–11 High-Level Development Conference. At the conclusion of the visit, Mr. Beddies issued the following statement:

“The economy performed strongly in the first six months of this year. GDP grew by 7.9 percent (year-on-year) after negative growth in 2012. Growth was driven by a recovery in gold production, which increased by 46 percent. Nongold growth was also strong at 5.5 percent, boosted by buoyant construction, trade, and services. Inflation increased slightly to 8 percent in June (year-on-year), but is expected to recede in the second half of this year based on the favorable outlook for this year’s harvest. Core inflation declined to single digits.

“The brief power disruption at the Kumtor mine caused by recent protests is not expected to result in lower gold production in 2013. The economy is still projected to grow 7.4 percent in 2013 as envisaged earlier. The current account will somewhat deteriorate in the medium term because of lower gold prices, but anticipated foreign direct and infrastructure investments will cushion the impact on the balance of payments.

“The authorities remain committed to medium-term fiscal consolidation. The 2014 budget will therefore be guided by the fiscal consolidation path agreed under the ECF. The expected closure of the U.S. Transit Center at the Manas airport in July 2014 will result in a loss in nontax revenue. The authorities believe that additional grants combined with streamlining spending will help maintain the agreed deficit.

“Structural reforms are progressing. The ministry of finance created a new tax policy department with a view to strengthening tax policy. A new law on public procurement will be submitted to parliament in July. The government is discussing the draft banking code and will submit it to parliament in September. It will be essential that the new banking code is passed in line with best international practice. Discussions to resolve the dispute with Centerra Gold are ongoing.”