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On December 4, 2015, the Executive Board of the International Monetary Fund (IMF) completed the first review of the Kyrgyz Republic’s economic performance under the three-year arrangement under the Extended Credit Facility (ECF).

The Board’s approval enables the immediate disbursement of SDR 9.5 million (about US$13.2 million). This would bring total disbursements under the arrangement to SDR 19 million (about US$26.4 million). The extended arrangement for SDR 66.6 million (then about US$92.4 million) was approved on April 8, 2015 (see Press Release No. 15/165).

Following the Executive Board discussion Mr. Min Zhu, Deputy Managing Director and Acting Chair, made the following statement: “The Kyrgyz authorities have managed successfully to keep the program largely on track despite that the economy continues to face adverse external and domestic shocks. The economic slowdown, currency depreciations in the region, and falling gold prices and remittances have reduced economic growth, worsened external and fiscal balances, and weakened debt sustainability. Budgetary slippages linked to the October elections have also weakened the fiscal situation.

“The authorities’ commitment to resume fiscal consolidation starting in 2016 is welcome, and will help rebuild buffers and keep debt on a sustainable path. Tax revenues are expected to increase supported by a set of new measures aimed at expanding the tax base and strengthening tax administration. Current expenditures should decline as spending on goods and services and other nonpriority outlays will be streamlined. Additionally, the public investment program will be rephased and prioritized.

“Monetary policy will remain on a tightening bias to contain inflation pressures. The central bank will also continue to pursue a flexible exchange rate policy to safeguard foreign exchange reserves and preserve competitiveness, with interventions limited to smoothing short-term fluctuations.

“Maintaining a healthy banking sector is critical in the current environment. Banking supervision will be strengthened, and the banking law needs to be enacted as a matter of priority to strengthen the independence of the central bank and ensure a robust bank resolution mechanism.”