Prospects of a stronger US dollar and higher interest rates make a strong case for economic reforms in Caucasus and Central Asia, Mr Jihad Azour, director of the Middle East and Central Asia department of the International Monetary Fund (IMF), said at the briefing on the region held at the IMF headquarters in Washington DC during the IMF/World Bank 2017 Spring meetings.

If the scenario of rising US dollar materializes, it may exacerbate currency mismatch for the countries of Caucasus and Central Asia, most of which have significant dollar-denominated debt.

Today the US President, Mr Donald Trump, tweeted: “Big Tax reform and tax reduction will be announced next Wednesday”.

Tax overhaul, which could include incentives for business repatriation as well as cutting down taxes, may increase economic activity in the US and drive up dollar. This will leave indebted governments, which collect taxes in national currencies, with less dollar value for repayments. This is the case for Caucasus and Central Asia countries, which have highly dollarized economies.

The IMF advises them to push forward structural reforms, to overcome dependence on oil prices (for oil exporters) or metals or other commodities (for oil importers, like Armenia, Georgia, Tajikistan, and Kyrgyz Republic).