Press Release: IMF Approves Augmentation of ESAF Loan to Kyrgyz Republic

March 4, 1999

The International Monetary Fund (IMF) has approved a request by the Government of the Kyrgyz Republic to augment by SDR 8.88 million (about US$12 million) the IMF’s financial support under the current three-year Enhanced Structural Adjustment Facility (ESAF),1 approved by the Executive Board on June 26, 1998, in the amount of SDR 64.5 million (about US$88 million). See (Press Release No. 98/27. The augmentation, which is intended to help counter the impact of the Russian financial crisis on the Kyrgyz economy, will be available as part of the second loan under the first annual ESAF arrangement. The Executive Board made the decision in conjunction with the completion of the mid-term review of the first year of the ESAF.

Background

The program supported by the ESAF was designed to consolidate the gains in macroeconomic stabilization and structural adjustment achieved under Kyrgyz Republic’s first three-year ESAF-supported program, and to address the remaining deficiencies in creating a sustainable environment for continued growth based on a dynamic private sector. While implementation of the current program was broadly satisfactory during the first few months, the suddenness and magnitude of the external shock caused by the onset of the Russian crisis confronted the Kyrgyz authorities with the challenge of responding quickly and appropriately to the new external environment. The authorities have acted decisively to strengthen the program through significant tightening of financial policies and a reemphasis on the program’s structural component.

The Kyrgyz Republic joined the IMF on May 8, 1992. Its quota is SDR 88.8 million (about US$121 million). Its outstanding financial obligations to the IMF currently total the equivalent of SDR 124 million (about US$170 million).


Kyrgyz Republic: Economic Indicators

1995

1996

1997

1998

1999




Est.

Proj.


(Percentage change)






Real GDP

-5

7

10

2

3

Consumer prices1

32

35

15

18

8

Producer prices1

26

41

15

18

8






Broad money

77

23

25

17

11







(In percent of GDP)






Agriculture

41

46

41

40

41

Industry

12

11

16

17

17

Construction

6

6

5

2

2

Transport and communication

2

5

4

4

2

Other

39

32

34

37

38






Government revenue and grants

17

16

16

18

20

Government expenditures

33

25

25

28

27

Overall balance

-17

-10

-9

-9

-8






Exports

27

29

36

32

46

Imports

39

43

37

41

50

Current account balance

-16

-23

-8

-17

-12






GDP (In millions of soms)

16,145

23,400

30,686

35,832

40,188










Sources: Kyrgyz authorities; and IMF staff estimates.




1December to December.




1 The ESAF is a concessional IMF facility for assisting eligible members that are undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects. ESAF loans carry an interest rate of 0.5 percent a year and are repayable over 10 years, with a 5 ½-year grace period.

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