As peak repayments on external debt near, Kyrgyz leader says not to worry

06.11.2023, 12:06 exclusive.kz

Kyrgyz President Sadyr Japarov has said the country’s repayments on its external debt are expected to peak next year. He gave assurances that there were no grounds “to worry” and that his government could meet its obligations to the creditors.

“My presidency and my team’s work fall on a period of highest payments on our external financial obligations,” Japarov said.

But, despite the economic pressures linked to the coronavirus pandemic and “the difficult situation in the world, we have been paying off our debt in time”, he said.

As of March 2023, Kyrgyzstan’s public debt amounted to 5.62bn dollars, of which 4.51bn was external debt, according to government figures.

According to CEIC, an independent economic data analysis service, in June this year the country’s external debt reached 9.9bn. In 2022 it accounted for 84.4 percent of Kyrgyzstan’s GDP.

Kyrgyzstan’s debt to China’s EximBank stood at about 1.7bn dollars as of July 2022, about 43 percent of its total external debt at the time, reports said. As of August, the country’s overall national debt to China amounted to more than 5.84bn dollars.

The repayments on the Chinese loans will peak in 2025-2027. They have to be fully repaid by 2035.

Japarov said in a statement on Facebook on 4 November that under his presidency, or since 2020, the country’s budget grew three times, and his government had eradicated 90 percent of official corruption.

“This is exactly why our budget is growing. If you can remember, in 2019 people were concerned about our external debt. There was talk that we would not be able to pay it off and some of our territory would be taken over by creditors. There is no such worry anymore.

“On the contrary, along with making payments on our external debt, we are raising wages, pensions and benefits, and also strengthening the army,” Japarov said.

“The main thing is we are paying our debt with our own money, from the budget. We used to pay it by taking more foreign grants or loans,” he added.

“We have all the conditions for continuing to pay off our external debt,” Japarov said. “First of all, we need stability and peace.”

According to the IMF, the Kyrgyz economy grew by 5.5 percent in 2022, mainly thanks to gold production, trade, transportation and agriculture. It is expected to grow by 3.5 percent in 2023.

The national budget has benefited from the nationalisation of the country’s biggest gold mine, Kumtor, in 2021, and increase in trade.

However, questions remain about the government’s ability to maintain economic growth and, most importantly, to stay in power and ensure political stability.