The Russian Financial Crisis and its Consequences for Central Asia

Gonzalo Pastor Campos and Tatiana Damjanovic

No 2001/169, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the economic conditions in central Asia at the time of the Russian financial crisis of August 1998; the channels by which the crisis was transmitted to the central Asian region; and the policy responses. The paper concludes that, while real exchange rates of central Asian national currencies vis-à-vis the Russian ruble have returned to their pre-crisis levels following the nominal devaluations that ensued, other indicators of external competitiveness, such as unit labor cost indices, suggest the need for further surveillance in this area. Also, it is not yet clear if full exchange rate flexibility has been established in central Asia despite the protracted and costly exits from the nominal exchange rates in place at the time of the crisis. Finally, the debt-to-GDP ratios in central Asia, which grew rapidly between 1998 and 1999 in the context of large exchange rate adjustments, remain a challenge for the Tajik and Kyrgyz authorities, in particular.

Keywords: WP; exchange rate; Kazakhstan; Kyrgyzstan; Tajikistan; financial crisis; Russian financial crisis; exchange rate policy; external debt issues; expenditure switching; exchange rate depreciation; export competitiveness problem vis-a-vis Russia; Tajik ruble; exchange rate fixity; exchange rate volatility; competitiveness problem vis-a-vis Russia; Uzbek sum; problem vis-a-vis Russia; exchange rate peg; Tajik government; expenditure switching policy; Exchange rates; Exports; Exchange rate arrangements; Central Asia; Asia and Pacific (search for similar items in EconPapers)
Pages: 42
Date: 2001-10-01
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Citations: View citations in EconPapers (10)

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