The Kyrgyz government predicts the budget deficit for 2017 in the amount of 23.3 billion soms. The vast majority of it are credits got in over the years of independence.
24.kg news agency decided to find out to whom the republic indebted the most and when the time to pay them back will come.
The ratio of public debt to the forecast GDP for 2016 amounted to 60.9%, while the public external debt to the forecast GDP ratio is 56.3%. Thus, the public debt of the Kyrgyz Republic amounted to 276,788.3 billion soms ($4,072 billion).
The Ministry of Finance says that the government debt to GDP ratio for 2016 is within the permissible value. According to the law on public and private debt of the Kyrgyz Republic, the size of the public external debt restriction is 60% of GDP.
However, financial experts believe that it is inappropriate to set a fixed percentage. The Budget Code of the Kyrgyz Republic will come into effect on January 1, 2017. It states that “the size of the public debt is determined by the government in accordance with international indicators of debt sustainability, and is provided by the law on the republican budget for the next fiscal year and two forecast periods”.
According to the Ministry of Finance, the public debt is serviced in a timely manner and in full. There are no arrears.
In 1992 Kyrgyzstan took loans for $4.9 million. The appetite grew with each passing year, and by 2002 the debt reached $1.5 billion, and by September 2016 – $3.7 billion.
At the end of 2005 the debt of the Kyrgyz Republic decreased by $6.7 million, but then again began to grow rapidly.
Kyrgyzstan mainly takes soft loans. There are already $2.2 billion of them. The most generous in this group is the Export-Import Bank of China, which has given the country $1.4 billion.
The debt in form of non-concessional loans is $9.19 million, $6.06 million of which Kyrgyzstan indebted to Hermes Kreditversicherungs AG (Germany).
Multilateral concessional loans have exceeded $1.5 billion. The debt to the ADB exceeds $578.4 million, to IDA – $635.1 million.
Multilateral non-concessional loan was provided by EBRD only. Its sum is more than $41.6 million.
Deputy of the Parliament Mirlan Bakirov believes that it is okay to get loans from international organizations – it is dangerous to be a debtor of Chinese Exim Bank. According to him, the contract with it states that the penalty is charged immediately in case of delays in payment.
For example, as for the construction of Bishkek – Naryn – Torugart road, which is financed by the Chinese bank, the grace period is only 5 years. Interest rate is 2% and repayment period is 20 years. The project is planned for 2010-2014.
According to the Finance Ministry, during the independence Kyrgyzstan has taken $2.86 billion from the Chinese bank, $1.103 billion of which have been spent on roads and $983 million- on the energy sector.
Since the beginning of 2016, the external debt increased by $128.9 million.
Meanwhile, the Eurasian Economic Commission recommended Kyrgyzstan to take measures to reduce the debt. Recommendations have been worked out because of the excess of the quantitative value of the debt, set in EEU Treaty.
Union countries must see to it that the level of the state administration sector debt does not exceed 50% of GDP.
The monitoring showed that in the third and fourth quarters of 2015 the debt amounted to 51.4% and 58% of GDP respectively.
To reduce the debt, EEC offered Kyrgyzstan to implement a set of measures: improve the management of the debt of the state administration sector; reduce the budget deficit of public administration sector to optimize its debt financing; take long-term measures to ensure economic growth and reduce the need in debt borrowings in future.
This should help to improve the efficiency of public debt management and reduce the debt burden on the state budget.
But as of today, Kyrgyzstan has a great debt load. It is possible that in the future the country will have to borrow to pay off the previously taken loans, if it still remains sovereign by that time. (24.kg/Business World Magazine)