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Tajikistan’s External Debt Reaches $3.25 Billion

As of October 1, Tajikistan’s external debt stood at $3.25 billion, according to a report by Asia-Plus citing the Ministry of Finance. This represents a modest 0.2% increase, or $7.1 million, compared to January 1. Approximately 96% of the debt comprises direct government debt, incurred to meet state obligations, while $138.8 million is under state guarantees. Tajikistan’s external debt-to-GDP ratio is 27%, which is considered a favorable level. The largest creditors include the World Bank ($370 million), the Asian Development Bank ($260 million), the Islamic Development Bank ($212 million), and the European Bank for Reconstruction and Development ($167 million). A significant portion of the debt, $500 million, consists of Eurobonds issued in 2017 to finance the completion of the Rogun Hydroelectric Power Plant. While the government adheres to the repayment schedule for these bonds, only interest payments have been made so far. Next year, Tajikistan is expected to seek additional loans from development partners to continue work on the Rogun Hydroelectric Power Plant. This move is anticipated to substantially increase the country’s external debt. By way of comparison, The Times of Central Asia recently reported that neighboring Uzbekistan’s public debt is projected to reach $45.1 billion by the end of 2025.

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Turkey Writes Off All Foreign Debt to Kyrgyzstan

Turkish President Recep Tayyip Erdogan has held talks with Kyrgyz President Sadyr Japarov during his state visit to Bishkek. It has became known that Turkey has decided to write off Kyrgyzstan's remaining debt, which amounted to $58.9 million. “I express my sincere gratitude to President Erdogan for the decision to write off the debt,” Japarov said at a joint press conference. He also asked the Turkish side to consider customs privileges for Kyrgyz suppliers and to involve Turkish companies in constructing small—and medium-sized hydroelectric power plants in Kyrgyzstan. Erdogan said the talks resulted in the signing of 19 documents on cooperation, including in trade. “We discussed steps to increase trade turnover between our countries from $2 billion to $5 billion. Turkish construction companies have implemented more than 90 projects here with a total value of about $1 billion,” he said. This is not the first time Turkey has forgiven Kyrgyzstan's debt. In 2011 Ankara wrote off $51m of the country's foreign debt, accrued over the previous 15 years. According to the Kyrgyz Finance Ministry, by August 2024, the country's total foreign debt amounted to $4.6 billion. Erdogan is on a state visit to Kyrgyzstan from November 4-6.

Finance Economy Foreign debt Government State Budget

Uzbekistan’s Debt Reaches $37 billion

According to Kun.uz, based on data issued by the Ministry of Economy and Finance of Uzbekistan, as of July 1, 2024, the state debt of Uzbekistan - $30.9 billion foreign and $6.1 billion domestic - exceeded $37 billion for the first time. For comparison, as of July 1, 2023, the state debt amounted to $31 billion 628 million, indicating an increase of $5.4 billion or 17% in just one year. As stated in the report, the growth rate of Uzbekistan’s foreign debt has increased sharply in recent years. In particular, at the end of 2017, the state debt amounted to $11.6 billion, and by the end of 2023, reached $34.9 billion, a threefold increase. By the end of the first half of the year, 42% of the total state external debt ($13 billion) was allocated to budget support, 19% ($5.7 billion) to the fuel and energy sector, 9% ($2.7 billion) to transport and transport infrastructure, and 9 % to agriculture and water management ($2.7 billion.)

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IMF: Uzbekistan’s Foreign Debt to Decrease by 10% in 2029

According to a new report issued by the International Monetary Fund, in recent years and against uncertainties from the pandemic and Russia’s war in Ukraine, Uzbekistan's rapid growth in economy is set to continue in tandem with a significant decline in poverty. Despite a slowdown in the development of trade partners and the removal of the fiscal stimulus in 2023, a strong economic growth is predicted for this year and supported in the medium term, by the completion of budgetary consolidation, ongoing structural reforms, and continuing capital inflows, demonstrates the government’s commitment to promoting market-oriented reforms to further Uzbekistan’s economic development. Challenges still remain, however, in the large state footprint in the economy and last year’s expansionary fiscal policy, which the authorities determined to persevere in their reform efforts, must address to advance sustainable and inclusive growth. The monetary policy which has reduced inflation must continue until it reaches the Central Bank of Uzbekistan's target. Sustaining a high real policy rate, tight fiscal and macro-prudential policies, and supportive structural reforms would gradually reduce inflation to the target by the end of 2027 and the CBU should stand ready to increase its policy rate if the energy price reform leads to broader price pressures and raises inflation expectations. The government should continue efforts to accelerate the restructuring and privatization of state enterprises, eliminate preferences for state-owned enterprises and unbundle large enterprises to increase competition and improve the business environment. The authorities are accelerating efforts for WTO accession and undertaking measures to bolster external competitiveness and export diversification; opening markets and reducing monopolies would boost growth and help reduce inflation. According to the IMF’s analysis, it will reach 60.1% of GDP at the end of 2024, and the country's total external debt is expected to decrease to 51% of GDP by 2029. Similarly, from 33% of GDP at the end of 2024, government-guaranteed external debt is likely to decline to 27% by 2029. Several factors contribute to these positive statistics. The government of Uzbekistan aims to limit the budget deficit to 3% of GDP by introducing annual limits on the budget deficit and new debts. In addition, the 2023 public debt law limits state-guaranteed debt to 60% of GDP, with proposals for debt reduction if it reaches 50%. As stated in the report, the authorities emphasized their commitment to maintaining a moderate level of debt and noted that the government’s goal of reducing and maintaining the medium-term fiscal deficit at 3% of GDP would send purchasing power parity and external borrowing as a share of GDP downwards

Foreign debt

Kazakhstan’s Foreign Debt Inches Upwards

The external debt of Kazakhstan has reached $161.9 billion, an increase of $1.3 billion over the past year to October 2023, according to the National Bank of Kazakhstan. The main creditors of Kazakhstan are the Netherlands ($42.5 billion), Great Britain ($14 billion), international organizations ($13 billion), Russia ($12.5 billion), the USA ($11.3 billion), France ($11.2 billion), Bermuda ($9.4 billion), and China ($9.2 billion). Considering the structure of Kazakhstan's external debt as a whole, the bulk of loans is occupied by inter-company debt ($92.2 billion), obligations of other sectors ($44.4 billion), Government bodies ($12.5 billion), the banking sector ($10.6 billion), and the National Bank ($2.1 billion). According to the latest data, the volume of total external debt of all countries in the world by the end of 2022 reached a record $92 trillion. As of April of last year, the countries with the highest national debt in the world were considered to be the U.S.A. ($29.46 trillion), Japan ($13.05 trillion), China ($10.12 trillion), France ($3.3 trillion), and Italy ($3.17 trillion). In terms of its debt to GDP ratio, Kazakhstan ranks in a respectable 148th position with a debt to GDP ratio of 27.4% as compares to first place Japan, which has a debt to GDP ratio of 262%. Earlier, the Ministry of the National Economy of Kazakhstan proposed setting a limit on the external debt for 2024 for Samruk-Kazyna and the national holding, Baiterek - the two companies which most often borrow from other countries. This limit would be in the amount of almost $12.5 billion for Samruk-Kazyna, and just over $5 billion for Baiterek. In spring of the last year, President Tokayev declared that for Kazakhstan to reach the category of countries with high level incomes, the economy of the country would need to grow 6% annually. As of November of last year, this indicator was at 4.9%.

Foreign debt

Kyrgyzstan’s Debt to China: Another lever of Influence?

Stagnation of the world’s economy, decreasing international trade and growing inflation put the spotlight on the issue of returning Kyrgyzstan’s foreign debt, a large part of which is owed to China. The debt is to be repaid sooner or later, but it would make the country sacrifice either its facilities or territory. In both cases, it is a blow on the country’s sovereignty. Historically, China has been a creditor of countries with high corruption levels, unstable political systems, and nontransparent economies. For instance, Brunei, Namibia, Congo, and Papua New Guinea all have a “hidden” debt to China — more than 10 percent of GDP. Kyrgyzstan’s foreign debt now stands at $5 billion, including $4 billion to China. For comparison, in 2008 Kyrgyzstan’s debt to China was $10 million. Unlike international financial organizations, such as the IMF and World Bank, China gives loans to Kyrgyzstan on commercial terms that are not disclosed. The existing debt does not prevent the Kyrgyz government from taking new loans, which leads to increasing debt burden. In Kyrgyzstan, China has financed mainly infrastructure projects, showing more interest in the water and energy sector — one of the main economic and strategic resources of the country. It is not surprising, as in today’s world access to water resources gives additional levers of influence. A potential project in this sector is construction of the bypass Chui canal-2 and Buruldai reservoir with a total cost of about $140 million. The project’s economic feasibility, its possible environmental impact and other aspects require a comprehensive analysis. Anyway, the project’s implementation would increase the country’s debt burden and give China yet another lever of influence on Kyrgyzstan. Such projects are not just a matter of money, debts and commitments but also social stability, given the history of relationships between local Kyrgyz population and Chinese investors (for instance, a mass brawl with stoning at Soltan-Sary deposit). A good example of Beijing using its “soft power” is neighboring Tajikistan, 40 percent of whose $3.2 billion foreign debt belongs to China. Beijing also grants payment deferments on its loans. In exchange, Tajikistan has given thanks to China by ceding 1.1 thousand square kilometers (0.77 percent of its territory) to China in a 2011 border demarcation, supporting China at UN votes, and allowing Chinese companies develop nearly 80 percent of Tajik gold deposits. With the above in mind, Kyrgyzstan has to think twice before taking new Chinese loans.