Macroeconomic Forecast Kyrgyzstan

We continue to expect the fiscal account to experience a widening this year to 7.6% of GDP, from 6.1% of GDP in 2010. We forecast government expenditures to rise to KGS80.2bn as the government attempts to implement infrastructure projects to rebuild the areas ravaged by the ethnic violence in June 2010. Moreover, the government's expansionary fiscal policy extends to raising public sector workers' salaries, which will put upward pressure on expenditures. We expect the July 19 earthquake in the south of the country to put further strain on government finances. That said, revenues should be bolstered by elevated commodity prices,

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