2016年-世界发展银行全球_Kyrgyz_Republic_Economic_Update_Winter_2016___A_Resilient_Economy_on_a_Slow_Growth_Trajectory_16页_1mb

Kyrgyz Republic: A Resilient Economy on a Slow Growth Trajectory

Core Content Overview

The Kyrgyz Republic has shown resilience in its economy despite a challenging regional environment, but growth remains modest. The report highlights the importance of tax reform as a key driver for fiscal sustainability and improved service delivery. It also outlines recent economic developments, structural policies, and the outlook for the next few years.

Main Economic Developments

• Growth Trends: Real GDP growth in the Kyrgyz Republic was 2.7% in January-October 2016, down from 4.8% in the same period in 2015. Non-gold real GDP growth was 3.9%, driven by public spending and remittances.
• Sector Performance: Agriculture, construction, and services contributed the most to growth, with respective rates of 2.2%, 7.6%, and 3.2%. The gold sector declined by 3.0%, while industry growth was 3.1%.
• Inflation and Exchange Rates: Inflation fell to -0.2% in October 2016, largely due to reduced food and fuel prices. The exchange rate stabilized, with the Kyrgyz Som appreciating against the US Dollar and the Kazakh Tenge.
• Trade and Current Account: Exports declined by 15.1% in January-August 2016, primarily due to weak gold and manufacturing exports. The trade deficit increased slightly, but the current account deficit narrowed to 17.3% of GDP from 18.2% due to higher remittances.

Fiscal Policy and Structural Adjustments

• Budget Deficit: The government ran a deficit of 5.9% of GDP in January-September 2016, compared to a 0.7% surplus in the same period in 2015. This was driven by increased current and capital spending.
• Revenue and Expenditure: Total revenues were 34.5% of GDP, down from 35.4% the previous year. Tax revenues increased slightly to 26.5% of GDP, while non-tax revenues fell by 2.8 percentage points to 6.1% of GDP.
• Expenditure Growth: Total expenditure rose to 40.5% of GDP, mainly due to wage increases and capital spending on infrastructure projects.
• Fiscal Challenges: The expansionary fiscal stance is unsustainable due to high debt levels. Fiscal consolidation is needed to rebuild buffers and ensure macroeconomic stability.

Outlook for the Economy

• Growth Projections: Real GDP is expected to grow at 3.4% in 2016 and 3.1% in 2017, with non-gold output growing by 3.9% in both years.
• Inflation Trends: Inflation is projected to rise to around 4% in 2017 due to increased private consumption from higher remittances.
• Fiscal Reforms: The report emphasizes the need for tax reform to increase revenue and create fiscal space for development. Structural reforms are also needed to shift the growth model from reliance on remittances to more diversified economic activity.
• Risks: Risks remain elevated due to potential adverse developments in neighboring economies, especially related to oil prices and exchange rate dynamics.

Special Focus: Tax Reform

• Tax Revenue Structure: Tax revenues account for 26.5% of GDP, with indirect taxes (VAT, Turnover Tax) making up over 50% and direct taxes (CIT, PIT) contributing about 25%.
• Tax Productivity: Tax productivity is low, with VAT productivity at 39% (vs. ECA average of 66%), CIT at 5% (vs. ECA average of 7%), and PIT at 9% (vs. ECA average of 16%).
• Informality as a Constraint: The informal economy poses a significant challenge to tax collection. The 2013 BEEPS survey found that 54.8% of firms had to give gifts to tax officials, compared to 13.4% in the ECA region.
• Policy Gaps: The tax system suffers from exemptions and special regimes that reduce the tax base. There is also a need to improve compliance and reduce corruption.
• Tax Administration Issues: The tax administration is inefficient, with low e-filing rates and limited access to third-party information. This hampers risk management and compliance.
• Recommendations:
  • Broaden the tax base by eliminating exemptions and special regimes.
  • Consider increasing the VAT rate and phasing out the turnover tax.
  • Improve tax administration through better use of ICT tools and risk-based methods.
  • Enhance the integrity of the taxpayer database and improve access to third-party data.
  • Strengthen e-filing systems and tax arrears management.

Key Indicators and Data

• Exchange Rate: The Kyrgyz Som appreciated against the US Dollar and Kazakh Tenge due to the central bank's interventions.
• Monetary Policy: Despite rate cuts, credit to the economy declined, indicating weak transmission mechanisms.
• Tax Compliance: The 2017 Doing Business report ranks Kyrgyzstan 148th in tax compliance, far behind ECA and OECD averages.

Conclusion

The Kyrgyz Republic faces a challenging path to sustainable growth, requiring a combination of fiscal consolidation, tax reform, and structural changes. Tax reform is emphasized as a critical step to enhance revenue mobilization and support long-term development. Strengthening tax administration and reducing informality are essential to improving compliance and ensuring equitable growth.