USD 89.43
EUR 96.86
RUB 0.95

Kyrgyzstan's debt to China grows 37 times for 15 years. What it was taken for?

To date, the main creditor of Kyrgyzstan is theExport-Import Bank of China (Eximbank). The republic owes it more than $1.7 billion. Moreover, the republic borrowed 90 percent of the amount when Almazbek Atambayev was president of the country.

When they began to enjoy it

Kyrgyzstan took its first loan from Eximbank in 1992. The amount was small by today’s standards — about $5 million.

The republic paid it faithfully and by 2000 had fully repaid the loan in order to take out a new one.

The amounts were small at that time, so there were no concerns. Debts to China began to grow sharply in 2008. Then Kyrgyzstan borrowed $38 million in just one year. And that was just the beginning. Since then, more and more loans have been taken out, and the debt has grown exponentially.

Eximbank’s lending terms are extremely strict. That is why Presidents Askar Akayev and Kurmanbek Bakiyev were in no hurry to borrow money from it. All the funds allocated by China are loans. They were provided for 20 years with a grace period from 5 to 11 years. The fee for the loans granted is 1.5-2 percent per annum.

What the loans were used for

A total of nine projects worth $2,087,6 billion have been or are being implemented in Kyrgyzstan at the expense of the Export-Import Bank of China. These are mainly road rehabilitation, modernization and construction of power lines, and modernization of Bishkek’s Heating and Power Plant.

The republic borrowed the most from the Eximbank during the presidency of Almazbek Atambayev — more than $1.5 billion (90 percent of the total debt to China). If at the end of 2010 the debt to China was only $150.9 million, in 2017 it was already $1,708 billion.

The most expensive project was the rehabilitation of the alternative North — South road. At least $399.9 million was initially allocated for it. Concession and preferential loan agreements were concluded for the project. As a result, the total amount of lending for this project alone reached $698.6 million.

There are two other projects that cost a penny. These are the construction of Datka — Kemin power transmission line and modernization of the Bishkek Heating and Power Plant (HPP). They cost a total of $775.8 million.

Criminal cases and peak payments

The most expensive projects, which were built at the expense of the Chinese funds, also became the most scandalous. The modernization of the HPP ended in a criminal case and accusations of damage to the state amounting to 5.4 billion soms. Almazbek Atambayev himself, as well as almost all the officials from the period of his presidency, spent some time in the pre-trial detention center of the State Committee for National Security.

There are also periodic calls to study the construction of Datka — Kemin power transmission line and an alternative North — South road. So the high-profile revelations on them may be yet to come.

But scandals and showdowns in Kyrgyzstan are of little interest to the Chinese Eximbank. All that matters to it is the strict fulfillment of obligations. Now the authorities are in no hurry to borrow from the PRC. The reason is not that they have become more cautious. It’s just that the peak of debt repayment to China is expected from 2025 to 2027. The republic must fully repay all loans to China by 2034.

But this does not mean that there will be no more loans. Kyrgyzstan has signed about 20 agreements with Chinese companies in the fuel and energy sector. The conditions on them are unknown. It is quite possible that they could add several tens or even hundreds of millions more to the republic’s debt obligations to China.