Postcard from Bishkek

Today, December 27th, marks the anniversary of two of the world’s major financial institutions: The World Bank and the International Monetary Fund.

Kyrgyzstan is a member of both organizations and receives help and advice from both.

The two institutions were conceived at a United Nations conference convened in Bretton Woods, New Hampshire, U.S. in July 1944.  They came into existence as institutions in December 1944 when 29 of the 45 members present at the conference had signed the respective agreements.

 

The International Monetary Fund, (IMF), also known simply as the “Fund”, aims to build a framework for economic cooperation that would avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s.  Currently there are 184 members.  The headquarters are in Washington. (For further information, see: www.imf.org.)

Newly independent Kyrgyzstan joined the IMF in 1992 and has received financial assistance in the form of both grants and loans through a number of different facilities operated by the Fund, and also technical assistance in areas such as tax reform, reforming the banking system and improving the quality of official statistics.

Anyone who takes out a loan or credit knows that they usually come with some form of conditions and monitoring, and the IMF negotiates stringent conditions with the government and regularly monitors the performance of the economy. In particular, by acceding to membership of IMF, the government of Kyrgyzstan undertook to implement certain policies and also to refrain from introducing certain financial instruments such exchange rate restrictions or discriminatory practices without prior approval from the Fund.

 

 

The World Bank is a vital source of financial and technical assistance to developing countries around the world.

It is not a bank in the common sense. It comprises of two unique development institutions owned by 184 member countries:— the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Each institution plays a different but supportive role in our mission of global poverty reduction and the improvement of living standards.  The IBRD focuses on middle income and creditworthy poor countries, whilst the IDA focuses on the poorest countries in the world. Together they provide low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications and many other purposes.

 

Kyrgyzstan joined the World Bank in 1992 and the Bank has become one of the major donors supporting economic development, with aid worth a total of about one billion dollars on 48 different projects  with a focus on development in the rural regions, (of which some 20 projects are still ongoing).  In the early years, the bank provided the country with both grants and interest free loans, (subject to a service charge), but since 2005 all funding has been in the form of grants which do not have to be repaid.

 

In addition, the World Bank Group includes three more organizations: the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).  As far as I can tell, Kyrgyzstan is a member of the first two, but although it has signed the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, (which is the basic document governing the ICSID), in 1995, it has never ratified it.

IFC promotes sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives.  Established in 1956, it is the largest multilateral source of loan and equity financing for private sector projects in the developing world, promoting sustainable private sector development.  There are 178 members and the headquarters are in Washington. (For more information, see: www.ifc.org).

Kyrgyzstan joined IFC in 1992 and the organization opened a representative office in the country in 1997.  It concentrates on strengthening the financial sector, (especially microfinance institutions and introducing new financial products into the market such as leasing), and supporting the growth of small and medium sized enterprises, making  investments in financial institutions, general manufacturing, mining and agribusiness.  Since 1996 they have invested over USD90 million into the economy.

 

MIGA’s mission is to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people’s lives. (For more information, see: www.miga.org)

 

Back in September 2009, during a debate in the Jogorku  Kenesh, the Deputy Minister of Finance reported to the deputies that Kyrgyzstan was a member signatory of 130 international communities, (organizations, treaties and so forth …).  In May, 2011, the Foreign Minister told the same body that “currently Kyrgyzstan is a member of 85 international organizations.  I suppose that there is a logical and reasonable explanation for the discrepancy between these two figures in that the Finance Ministry was talking about belonging to “international communities”, whilst the Ministry of Foreign Affairs was talking about membership of “international organizations”.

Perhaps more worrying was news that the Foreign Minister’s told the parliamentary Committee on International Affairs and Interparliamentary Cooperation: “Kyrgyzstan owed around $15 million for membership fees to international organizations”.  That’s quite a hefty sum, but doesn’t represent the fees just one year.  Apparently some membership fees haven’t been paid for several years.

As a member of several associations, I know that it can sometimes be difficult to collect subscriptions from members and the ultimate sanction open to those bodies is, of course, expulsion of the delinquent member.  Fortunately, it seems that few international organizations have opted to follow that course of action as far as Kyrgyzstan is concerned.

I am not sure if the Kyrgyz Republic is a fully paid up member of both the IMF and the World Bank, but I hope so.  Fortunately, both maintain offices and continue to work in the country.

 

Tags: Expat, For_the_Record, Kyrgyzstan, Organizations