The paper describes recent macroeconomic and financial developments and highlights a number of important medium- and longer-term policy issues. Empirical estimates of potential output growth for the Kyrgyz economy based on a number of different methodologies are presented. Competitiveness and trade policy, social policy issues, namely poverty alleviation and pension reform, are also taken up for discussion. Developments in the banking system since 1998 are described. Fiscal issues are discussed and also statistical data on economic indices are presented.

This Selected Issues paper examines figures related to the key policy areas for the Kyrgyz Republic. Specifically, the paper studies the sources of growth, the cost competitiveness of export, and trade restrictions in the region, which are all linked to the achievement of the growth and poverty reduction targets of the National Poverty Reduction Strategy. It addresses the issues of agricultural taxation and fiscal aspects of the environment. The paper also focuses on a specific structural problem in taxation, and analyzes the fiscal aspects of environmental protection.

Annotation The study reviews the transition efforts of four countries - Albania, Azerbaijan, Kyrgyz Republic, and Moldova, to develop recommendations, which may benefit countries in future transition efforts. These countries have been unable to overcome obstacles to achieve any sustainable success in terms of growth or poverty reduction.

This report: Selected Issues and Statistical Appendix was prepared by staff from the International Monetary Fund as background documentation for the periodic consultation with Kyrgyz. Papers discuss: recent economic developments; potential output growth over the long term; international competitiveness; trade policy; poverty alleviation; pension reform; the banking system; fiscal policy. The statistical appendix covers economic, financial and trade statistics and has a summary of the tax system of Kyrgyz.

'State-Owned Banks in the Transition: Origins, Evolution, and Policy Responses' reviews the experience with state banking over the last decade in the transition economies of Europe and Central Asia. State ownership of banking systems has undermined economic reform efforts and has distorted emerging markets. This study compares various approaches to reform and calls attention to the significant costs associated with continued state ownership. It concludes with lessons from experience and recommendations for policymakers on approaches to reducing state ownership of banks in the region. The findings indicate that restructuring of state banks has proven time consuming and costly, and governments are better off moving swiftly to privatize or liquidate their remaining state banks rather than attempting to rehabilitate them. This report includes seven case studies of individual state banks that have been reformed or privatized over the past decade. The case studies highlight the challenges of implementing various reform measures and illustrate how such challenges have been addressed in difficult economic and political contexts.

In the region of Central Asia and South Caucasus, what is the potential for armed conflict, and how might such outbreaks escalate to a level that could involve U.S. forces? The authors evaluate the key political, economic, and societal faultlines underlying the likelihood of conflict in the region, assessing their implications for regional stability and for U.S. interests and potential involvement over the next 10 to 15 years.