Key Takeaways
The Asian Development Bank is supporting the International Monetary Fund’s Caucasus, Central Asia, and Mongolia (CCAM) Regional Capacity Development Center to strengthen the region’s macroeconomic capacities for enhanced debt and fiscal management. The technical assistance seeks to contribute to robust growth and debt sustainability in countries in the CCAM region.
Debt challenges
Before the 2020 global pandemic, the region's economies have long been battling shocks, first from the global financial crisis in 2008-2009 and then the commodity price shock in 2014-2016. COVID-19 brought the latest blow that widened fiscal deficits in many countries.
For all countries in the Caucasus and Central Asia, their governments' gross debt is estimated to have increased to 33.0%% in 2020, an increase from 25.9% in 2019. These countries’ gross total external debt increased from 68.1% to 76.9% of GDP in the same period.
ADB provides support to IMF
Through the knowledge and support technical assistance or TA, Strengthening ADB’s Collaboration with the International Monetary Fund for Macroeconomic Management in the Caucasus, Central Asia, and Mongolia, the Asian Development Bank (ADB) provided $800,000 to the International Monetary Fund (IMF) for its new Caucasus, Central Asia, and Mongolia Regional Capacity Development Center (CCAMTAC).
CCAMTAC is a focal point for planning, coordinating, and implementing the IMF’s capacity development activities. The center undertakes capacity development in macroeconomic-related areas for Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan.
“I would like to extend my great appreciation to Governor Dossaev and the Government of Kazakhstan for hosting the new Center and being a major contributor to its operations," said IMF Managing Director Kristalina Georgieva at the virtual signing of the Letter of Understanding toward the establishment of a regional capacity development center in Almaty, Kazakhstan last December 2020.
"Our agreement today is a strong signal of the international community’s commitment to capacity development’s role in strengthening economies and improving people’s lives, as well as to a deep and durable engagement with the region,” Georgieva said.
The center will be physically established in Almaty, Kazakhstan, by late 2021. But remote capacity building activities have already started in January 2021 to respond to emerging needs for macroeconomic policy advice during the COVID-19 pandemic.
The technical assistance responds to the Group of Twenty (G20)'s call to enhance collaboration for capacity development between the IMF and multilateral development banks (MDBs). In March 2017, the G20 devised the principles for effective coordination between the IMF and MDBs in countries requesting financing while facing macroeconomic vulnerabilities.
Macroeconomic management boost
In the first phase of its operations between 2021 and 2026, the center will cover six priority areas identified by the IMF. These are public financial management, revenue administration, monetary policy, financial sector supervision, macroeconomic statistics, and macroeconomic framework.
Through ADB’s financial contribution to the CCAMTAC, the TA will provide capacity development in the CCAMTAC’s priority areas. In addition, the TA will enrich policy dialogue in the economic and financial stability cluster of the Central Asia Regional Economic Cooperation program, which is implemented together by ADB, the IMF, and the World Bank.
Projected results
ADB’s involvement through the TA will contribute to robust growth and debt sustainability in countries in the CCAM region. Specifically, the capacity building interventions will enable
- strengthened core public financial management functions and advanced public financial management practices and systems
- improved macroeconomic and financial statistics compilation and dissemination for decision-making
- enhanced macroeconomic forecasting and policy analysis capacities
- improved tax administration management and governance
- strengthened capacities of the central banks to implement monetary policies
- enhanced banking regulations and prudential norms
