IMF Executive Board Approves US $ 120.9 Million Disbursement to Kyrgyz Republic to Address COVID-19 Pandemic
March 26, 2020
- IMF Executive Board approves first request for emergency financial assistance to help member countries meet challenges posed by COVID-19.
- Approval of the Kyrgyz Republic’s request will make $ 120.9 million available to authorities to address urgent balance of payments needs resulting from the outbreak of the COVID-19 pandemic: helps catalyze donor support and frees up resources for essential COVID-19. related health expenses.
- To cushion the shock of the pandemic, the government is appropriately implementing a temporary easing of macroeconomic and financial policies.
Washington DC The Executive Board of the International Monetary Fund (IMF) approved a purchase of the Kyrgyz Republic under the Quick Finance Instrument (IFR) equivalent to
59.2 million (80.6 million USD at the current USD / SDR exchange rate, 33% of quota) and a disbursement under the Rapid Credit Facility (FCR) equivalent to 29.6 million SDR (40 , USD 3 million at the current USD / SDR exchange rate, 17% of quota) to meet urgent balance of payments needs resulting from the outbreak of the COVID-19 pandemic.
This is the first IMF emergency loan under the RFI / RCF in the world since the start of the pandemic.
The outbreak of the pandemic weakened the macroeconomic outlook for the Kyrgyz Republic and opened a balance of payments gap estimated at around $ 400 million. There is an unprecedented level of uncertainty around this projection. IMF support helps provide a safety net, increase buffers and build confidence in the Kyrgyz economy. It also helps catalyze donor support and preserve fiscal space for essential health spending related to COVID-19.
To cushion the shock of the pandemic, the government is appropriately implementing a temporary easing of macroeconomic and financial policies.
Following the discussion of the Board of Directors. Ms. Kristalina Georgieva, Executive Director and President, made the following statement:
“The COVID-19 pandemic has hit the Kyrgyz economy hard and created an urgent balance of payments need. All sectors are impacted with extreme severity as measures are taken to stop the spread of the virus.
“Given the unprecedented level of uncertainty, the IMF’s emergency support under the Quick Finance Instrument and the Quick Credit Facility is helping to provide a safety net, increase reserves and strengthen the trust. It also helps preserve fiscal space for essential health spending related to COVID-19 and catalyze donor support.
“To face the crisis, macroeconomic and financial policies must be relaxed. A temporary increase in headline inflation due to the weaker exchange rate must be compensated. Monetary policy should gradually bring inflation back within its target range next year. The flexibility of the exchange rate must be maintained to restore the external balance.
“A temporary widening of the budget deficit is appropriate, provided it can be fully funded by donors. In the short term, the priority is to protect health spending and create space to increase health and other spending once the full impact of mitigation measures is assessed. In the medium term, the budget deficit will need to be brought down to lower levels once the crisis has subsided.
“Bank capital and liquidity buffers must be used to absorb credit losses and tight liquidity. Once these cushions are exhausted, the central bank should be flexible about when capital and liquidity should exceed the minimum required, given the duration of the crisis.
“Swift donor support is needed to close the remaining balance of payments gap and ease the burden of adjustment.”