The IMF has called for greater independence for the NBKR to ensure price stability

Following consultations with Kyrgyzstan, the International Monetary Fund mission stated that strengthening the independence and governance of the National Bank is critical to ensuring price stability amid persistent inflationary pressures.

As noted in the statement by the mission led by Dmitry Gershenzon, monetary policy should remain focused on bringing inflation back within the regulator’s target range and anchoring inflation expectations. The IMF welcomed the National Bank’s recent increase in the discount rate, calling it a necessary step to curb price growth.

At the same time, the Fund separately emphasized that the institutional stability of the National Bank of the Republic of Kazakhstan remains vulnerable. The practice of regularly transferring the regulator’s profits to the budget while its capital remains insufficient was identified as a key problem.

“Repeated transfers of the central bank’s profits to the budget at a time when capital remains below the thresholds established by law risk undermining confidence in the institution and the effectiveness of monetary policy. We urge the authorities to comply with the provisions of the constitutional law governing the NBR’s activities, to cease regular profit transfers until capital is adequately restored, and to ensure that monetary policy decisions are fully aligned with the mandate to ensure price stability,” the IMF mission stated.

An additional challenge remains the effectiveness of monetary policy signal transmission to the economy. Despite the rate hike, the IMF points to persistent constraints:

• excess liquidity in the banking system;
• a wide and asymmetric interest rate corridor;
• the existence of subsidized and targeted lending through state-owned banks.

The Fund recommends strengthening liquidity management, narrowing the interest rate corridor, and reducing market-distorting lending instruments.

The IMF also advocated for greater exchange rate flexibility and diversification of international reserves.

“Although their volume has grown due to the revaluation of gold, the high concentration in this asset makes the economy sensitive to fluctuations in commodity markets,” the IMF emphasizes.