Stability-oriented macroeconomic policies, further policy reform needed to generate increased inclusive growth for Kyrgyzstan

AKIPRESS.COM - IMF Executive Directors welcomed the improved macroeconomic and financial conditions in Kyrgyzstan but noted that the economy remains vulnerable to external shocks and that risks are tilted to the downside.
Continued stability-oriented macroeconomic policies and further policy reform is therefore needed to create the necessary buffers and to generate increased inclusive growth.
While stressing the need to ensure long-term debt sustainability, a modest expansionary fiscal stance, as implied by the 2019 Budget, was considered appropriate. Given the negative output gap and tighter than anticipated fiscal stance in 2018, an increase in the deficit could be helpful without jeopardizing long-term sustainability. To create the appropriate fiscal buffer, the fiscal deficit should, however, remain below 2.5 percent of GDP from 2020 and beyond, allowing the stabilization of public debt, IMF said.