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Finance Ministry repeatedly increases state debt to GDP ratio threshold

The Ministry of Finance amends the Budget Code, increasing the threshold ratio of the state debt to GDP. Relevant parliamentary committees began to discuss the amendments.

It is noted that the bill proposes to set a clear restriction for the level of budget deficit in the public administration sector and the size of the state debt. The Ministry of Finance proposes to increase the budget deficit for public administration to the level of up to 3 percent of GDP. In addition, the size of the state budget reserve is planned to be increased from 2 to 3 percent of the volume of expenditures of the republican budget.

The Ministry of Finance plans to set a threshold of state debt to GDP ratio at 70 percent.

It is proposed to set January 1, 2020 as the date of entry into force of the law. Until that time, a transition period, during which all the necessary changes will be made to other regulatory and legal acts, will be in force.

At a meeting of the parliamentary committee on budget and finance, deputies asked the Finance Minister Adylbek Kasymaliev what the ministry would do if the dollar appreciated sharply. The Minister of Finance replied that there were mechanisms for this.

«If there are force majeure circumstances, the government will develop appropriate measures. Limiting of the national debt to GDP ratio is a requirement of international organizations. They ask to set it at 65 percent,» commented Adylbek Kasymaliev.

Recall, earlier Kyrgyzstan had a rule that the ratio of public debt to GDP should not exceed 60 percent of GDP. Kyrgyzstan has refused this rule in 2017. The country introduced the Budget Code, which prescribed a formula for the permissible value of the debt. Then Finance Minister Adylbek Kasymaliev argued that Kyrgyzstan could borrow other $ 500 million. The same was voiced today at the meeting of the Committee on Budget and Finance.

«Today, the Kyrgyz Republic has an opportunity to borrow more than $ 500 million,» the Finance Minister said.

As of July 31, 2018, the state debt of Kyrgyzstan amounted to $ 4,415.26 billion, or 300,502.46 billion soms.