IMF stands for economic integration in Central Asia and Caucasus region
Central Asia and the Caucasus will benefit from closer economic integration and the international Monetary Fund is ready to support the countries of the region in this process. This is obvious from the recent statement of IMF Deputy Managing Director Tao Zhang. The Fund notes the successful development of the CCA region in 2000-2010. The region according to IMF classification covers Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan. The GDP growth rate was high and inflation decreased. Progress has been achieved in improving the quality of life of the population. However, this success was largely based on commodities, public spending and construction. As a result, the economies of the CCA region were negatively affected by changes in the commodity market and external crises, which was especially noticeable in 2008-2009 and again since 2014. The slowdown in the trading partner countries has affected the regional economy as well. Nevertheless, the region has taken appropriate protective steps to stabilize the financial sectors. “We are now seeing a turnaround in economic activity. But while growth in 2017 exceeded expectations, the momentum was again driven by external factors - especially higher oil prices”, Zhang comments. In order to maintain this positive trend, the IMF recommends that the region move towards a new model of economic growth. First and foremost, this model should be based on greater openness, diversification and regional and global integration. An open to trade and investment economy will lead to increased productivity of enterprises. How can the region derive the maximum benefit from the economic convergence? First, according to IMF economists, CCA countries should take advantage of the global trend of lowering tariff and non-tariff barriers. That is, reducing customs duties, which are imposed on goods for import and export, and easing restrictions on imports. Secondly, the IMF advises to become more involved in multilateral initiatives led by the WTO and to expand regional trade. Economic integration should be based on a stronger macroeconomic framework. Sound, sustainable and transparent policies will ensure greater stability, predictability and confidence of investors, both domestic and foreign. Among other measures to maintain the high growth dynamics, the Fund points to the need for more focused efforts to move to a market model with a leading role of the private sector. “That would enable countries to effectively leverage the opportunities created by the current rebound in global activity and the prospect of closer regional and global integration”, said Regional Economic Outlook for Caucasus and Central Asia, published in May. For the private sector, however, promoting fair competition through trade, better regulation and improved access to finance can play a key role. In addition, as noted in the report, several countries have taken steps to expand and deepen market reforms: an example is the development plan adopted in Turkmenistan - the Presidential program for socio-economic development of the country for 2018-2024, Kazakhstan’s 100 concrete Steps and 3rd Modernization Initiative, and Armenia’s establishment of the Center for Strategic Studies. Even if reforms may not be accomplished in a short period and may sometimes be difficult, the IMF recommends that countries take advantage of the current global recovery to intensify their reform efforts. “With a strong, shared commitment to greater integration and openness, there is no doubt that the next chapter in the story of the CCA region can be greater growth, jobs, and prosperity for all”, concluded Tao Zhang.
