Conference Lays Out Roadmap for Caucasus, Central Asia

Experts gather to outline vision for region’s medium-term development

Greater investment, diversification, openness are encouraged

Region’s key challenge is to create inclusive, private sector-led growth

The May 19-21 conference, entitled “The Transition Journey: Experience and Lessons of the Past 20 Years,” noted that the region’s economies are currently experiencing strong growth—near 6 percent, on average—fueled by high oil and gas prices and strong remittances. But private investment in these countries has been limited, and the region remains heavily dependent on remittances and commodity earnings, leaving it vulnerable to shocks.

“CCA countries have the potential to join the next generation of emerging markets, but to do so, they will have to change their growth model,” said IMF Deputy Managing Director Min Zhu.

The conference, held in Bishkek, Kyrgyz Republic, was organized to take stock of the region’s economic progress some two decades after the collapse of the Soviet Union and to chart a way forward.

Bringing together current and former policymakers, academics, and representatives of international institutions, the gathering was sponsored by the IMF, the government of Switzerland, the European Bank for Reconstruction and Development (EBRD), and the National Bank of the Kyrgyz Republic as host.

Building resilience

Looking back over the past 20 years of transition, conference participants pointed to several significant achievements of the region’s economies. Growth has been robust, inflation and interest rates have come down significantly, and the financial sector is developing, with a rise in bank deposits and lending in recent years.

Moreover, after the global crisis, the CCA recovered quickly, in part owing to the fiscal cushions built up in the years preceding the crisis that allowed governments to take measures to dampen the initial downturn and then support growth. But with these buffers eroded by the crisis response, the CCA is now vulnerable to shocks—a vulnerability that is compounded by the region’s dependence on commodity earnings and remittances, participants said.

For this reason, CCA policymakers will have to redouble their efforts to diversify their economies away from natural resources and to create jobs. As part of their effort to develop other sectors, countries in the region will need to take steps to improve the business climate. And transparency and accountability will have to be brought closer to...