2 нояб. 2011 г.

IMF Urges Georgia to Create Buffers to Withstand Expected Risks

Growth in the eight countries of the Caucasus and Central Asia (CCA) is expected to remain fairly robust, but policymakers should be mindful of inflation risks and take advantage of the strong recovery to rebuild policy buffers and prepare for any downside risks that might materialize, the IMF says in its latest assessment.
According to the Regional Economic Outlook for the Middle East and Central Asia, released October 26 in Dubai, the CCA is set to grow 5.6 percent in 2011 and 6.2 percent in 2012 (see table). For the region’s oil- and gas-exporting countries, the expansion is driven by high oil and gas prices, while the oil- and gas-importing countries are benefiting from the continued recovery in Russia, a key trading partner.
However, external risks to the outlook in the CCA region have increased and derive from a heightened perception of fragility in the global recovery, the report noted.
“For the CCA, a sharp decline in global growth could mean a fall in commodity prices, a decline in export demand, and a decrease in remittances and capital flows to the region,” David Owen, Deputy Director of the IMF’s Middle East and Central Asia Department told a press conference in Almaty, Kazakhstan.
“If these external risks do not materialize, however, we foresee good prospects for the region, with fairly solid growth,” he added.
Oil and gas importers need to address external vulnerabilities
The growth outlook for region’s oil- and gas-importing countries—Armenia, Georgia, the Kyrgyz Republic and Tajikistan—is favorable. Activity has picked up strongly in 2011, reflecting a recovery from last year’s fall in agricultural production in Armenia and a rebound from the Kyrgyz Republic’s contraction resulting from civil unrest. Continued global recovery, including in Russia, is also benefiting the region by boosting both trade and remittances. The IMF forecasts growth at an average of 5.3 percent in 2012 for the oil and gas importers.
Driven largely by high food prices, inflation has been rising since mid-2010 (see chart). In response to surging inflation, governments throughout the region tightened monetary policy, but additional tightening is still needed in some countries, such as the Kyrgyz Republic and Tajikistan, the IMF assessment says.
With the recovery gaining speed, CCA oil and gas importers should aim for fiscal consolidation to rebuild fiscal buffers that were depleted during the global financial crisis, to help safeguard their economies against future shocks. Such fiscal adjustment—which has already begun in Armenia and Georgia—would also help rein in large external current account deficits, the IMF report states. Maintaining exchange rate flexibility and accelerating the pace of structural reforms to boost competitiveness will also help reduce external vulnerabilities.
Oil and gas exporters face risk of inflation becoming entrenched
The oil and gas exporters—Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan—are growing fast. This growth, coupled with an accommodative policy stance, poses a risk of overheating. Although international food and fuel prices are moderating, core inflation is projected to rise in 2012 in all of the CCA oil and gas exporters.
Given this risk, monetary policy should exit from its accommodative stance, the report recommends. However, monetary policy has only limited traction in most of the region’s countries, so policymakers should aim to enhance its effectiveness by fostering financial deepening, enhancing central bank independence, improving the capacity of monetary policy tools, promoting more competition in banking systems, and avoiding unnecessary government intervention.
For 2011, all of the region’s oil and gas exporters are maintaining an expansionary fiscal stance. To limit inflationary pressures and ensure stability, however, governments need to exercise caution over spending increases, cut nonpriority spending, and avoid further increases in hard-to-reverse items, such as wages and pensions, the report observes. Over the medium term, measures to enhance the transparency, quality, and efficiency of public spending, as well as to raise non-hydrocarbon revenues, would also contribute to fiscal consolidation.
“If, however, global growth deteriorates sharply, then tightening of macroeconomic policy might have to be put on hold,” the report cautions.
Fostering employment, inclusive growth
The reliability of unemployment estimates in the CCA is uncertain, but available data suggest that unemployment is high.
In Azerbaijan, the unemployment rate is near 10 percent, and in Armenia, it stood at 19 percent in 2009. Georgia’s unemployment rate in 2009 was about 17 percent, according to official estimates, but alternative estimates put unemployment in the range of 20–30 percent. In all countries, youth unemployment is even higher.
Creating jobs and fostering high and inclusive growth is therefore a priority for governments in the region, the report says. The key components of the medium-term reform agenda to address this challenge include policies that aim to improve the business environment; ensure equal access to public services; enhance transparency, governance and institutional quality; boost regional trade integration; and address skill mismatches between job-seekers and available jobs.

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29 окт. 2011 г.

USA to grant aid of USD602 million to Mongolia

Finance Minister S.Bayartsogt, US Ambassador to Mongolia Jonathan Addleton and representative of US Agency for International Development (USAID) Chuck Hovell signed change of intergovernmental agreement of the USA and Mongolia in the Government House on Friday.
The USA will additionally grant USD6.2 million in frame of development aid to Mongolia. The change of the agreement has focused to aid USD4,3 million to support of economic growth including help to private sector and increase its competitiveness intensifying economic strategic policy.
USD1.9 million will finance a project “To Strengthen Transparency and Governance” with the aim of increasing the Government transparency and responsibility along administration reform, corruption fight and judicial strengthening.
The U.S Government has been assisting Mongolia in deepening the democratic reform and forming the free-economic system. Since 1991, the USAID has granted financial aid of amount USD 214 million. The intergovernmental agreement on granting non-refundable aid of USD 285 million from the US Millennium Challenge Account was signed in 2007, and it has been realized so far.

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25 окт. 2011 г.

Kazakhstan was included into three high growth economics

Kazakhstan now is in the top three fastest growing economies in 2000-2010, reported today "Kommersant," referring to the report of Ernst & Young (E & Y) "Outlook for emerging markets" (EM) prepared by the Institute with the assistance of Oxford Economics. As indicated, 25 major markets with the highest growth rates were selected as fast-growing markets. E & Y is confident that the EM role will only grow: by 2020 their share will account for 50% of world GDP at purchasing power parity, 38% of global consumer spending and 55% of the world's investment in fixed assets. It was indicated that in addition to countries BRICS (Brazil, Russia, India, China and South Africa) the top 25 includes some countries in Eastern Europe, Latin America, Asia Pacific, Africa and the Middle East. Over the past decade, annual growth in the EM has averaged 5.8%, which is three times higher than that in major economies (U.S., UK, Japan and the eurozone in the chart are shown for comparison). "It should be noted, however, that despite all the growth in the country with the BRR will long remain poor: GDP per capita at purchasing power parity in China is only 16% of the U.S., India - 7%, on average, EM - 27%", - was stated in the message. As noted, the fastest growing economy in the last ten years was Qatar, whose real GDP grew annually at an average of 13%. The next in the lead is China (including Hong Kong), Kazakhstan and India. Russia in the top 25 is in tenth place with almost 5% average annual GDP growth. Foreign direct investment in EM decade increased from $ 205 billion to $ 444 billion and now stands at around 50% of the world total. The leader of this indicator (per capita) is Qatar with nearly $ 1.6 thousand per capita investment. This is followed by Chile, UAE, Saudi Arabia, the Czech Republic and Kazakhstan. Russia is on eighth place with $ 300 of investment per capita. Significant reserve of EM are human resources. A total of 25 countries with rapid growth in living 4.2 billion people, or 60% of the total world population. A growing population - a reserve labor force and source of demand for goods and services. It is expected that from 2010 to 2020 the number of working-age population in the RDB will increase by 268 million people (9.4%). At E & Y noted that in contrast to developed economies RDB not faced with increasing costs for an aging population.

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