March 27, 2020 / 4:07 AM / 9 days ago

UPDATE 1-IMF approves $120.9 mln disbursement for Kyrgyzstan to fight coronavirus

(Adds IMF mission chief comments)

WASHINGTON, March 26 (Reuters) - The International Monetary Fund said on Thursday its board has approved a $120.9 mln disbursement for Kyrgyzstan to help the Central Asian country fight coronavirus, the first emergency loan approved by the Fund since the outbreak started.

Kyrgyzstan has confirmed 44 cases of the disease, prompting the government to close borders, lock down several cities and districts and impose a curfew in the capital, Bishkek.

The IMF said the disbursement consists of an $80.6 million loan under the Rapid Financing Instrument program and a $40.3 million loan under the Rapid Credit Facility to meet Kyrgyzstan’s urgent balance of payment needs stemming from the crisis.

It added that the pandemic “has weakened the outlook for the Kyrgyz Republic and opened a balance of payments gap estimated at about $400 million.”

Kyrgyzstan’s economy relies heavily on remittances from hundreds of thousands of migrant labourers working in Russia whose incomes will be affected by the drop in the price of oil and rouble’s exchange rate.

Export revenue, especially that from re-exporting Chinese goods, could also take a hit due to coronavirus-related disruptions and border closures.

The Kyrgyz som has lost more than 12% of its value against the dollar this month and this could send inflation into low double digits this year, mission chief Christian Josz said. Economic growth outlook is “slightly positive”, he said.

Kyrgyzstan will need more financial aid and the Fund hopes the move will catalyze broader donor support, Josz said.

IMF Managing Director Kristalina Georgieva said earlier this week that more than 80 countries have sought IMF rapid financing assistance to help them deal with the coronavirus outbreak. (Reporting by David Lawder; Additional reporting by Olzhas Auyezov in Almaty; Editing by Sandra Maler & Simon Cameron-Moore)

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