Last week, the IMF Executive Board announced its approval of an 18-month $100 million arrangement under the Exogenous Shocks Facility for the Kyrgyz Republic. The aid will be primarily used to support Kyrgyz authorities in addressing several exogenous shocks, related to rising commodity prices, a “shortfall in hydropower,” and ongoing banking difficulties in neighboring Kazakhstan.

Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, attributed the slowdown in the Kyrgyz Republic’s economic growth to “[w]eakening global and regional growth in the wake of the international financial crisis, and spillovers from banking sector difficulties in neighboring countries that have reduced credit expansion in the Kyrgyz Republic.” He stated that the Kyrgyz government has adopted an economic program to address the affects of the exogenous shocks on their economy and that, “[t]he program emphasizes the maintenance of cautious monetary and fiscal policies and greater exchange rate flexibility. Fiscal discipline will be maintained through cuts in non-priority spending, tight control over the public sector wage bill, and a strengthening of public financial management.” He also noted that, “[t]he central bank will continue to monitor financial developments closely in order toe assess vulnerabilities and mitigate risk while strengthening banking supervision and regulation.”