Debt sustainability of Kyrgyzstan does not raise serious concerns, since the entire debt of the country is concessional. Evgeny Vinokurov, Chief Economist at the Eurasian Development Bank (EDB) and the Eurasian Fund for Stabilization and Development (EFSD), told reporters during the 2nd Eurasian Congress.
According to him, Kyrgyzstan constantly and consistently declares that it is not going to borrow on commercial terms. The main creditors of the republic are the International Monetary Fund (IMF), the Asian Development Bank (ADB), the EFSD, the World Bank (WB). Since the debts are concessional (for 20 years at 1 percent), then, despite the fact that the size of the debt in relation to GDP is large, its servicing remains sustainable for the state.
According to the EDB’s forecast, the national debt of Kyrgyzstan to GDP will decline until 2026.
«Our recommendation is to carefully approach the issue of further increase of the national debt. It is imperative to maintain extremely high-concessional debt. I will pay a compliment Kyrgyzstan. Since 2013, the country’s financial authorities have been increasing the share of domestic borrowings, and they have doubled from 2014 to 2019. On the one hand, this increases payments, since domestic borrowings are more expensive, and on the other, it reduces foreign exchange risks. This is, in fact, the right approach,» Evgeny Vinokurov said.
He also noted that the decrease in the level of debt obligations by 1.4 percent to GDP is expected within five years. The main driver of the decrease will be the recovery of economic activity and the expected moderate consolidation of expenses. By 2026, the republic will have a debt-to-GDP ratio of 60 percent.