According to the results of last year, the size of internal debt reached a quarter of the state debt in Kyrgyzstan. Just ten years ago, this indicator was only 6 percent.
From 2014 to 2023, the size of the internal debt increased by 11 times — from 12.3 to 139.8 billion soms.
In the coming years, the authorities of the republic plan to borrow more and more money in the domestic market.
The editorial team attempted to understand why Kyrgyz Republic prefers loans in soms and how safe it is to lend to the government.
Payments are Increasing
At the end of last year, internal debt in Kyrgyzstan amounted to $570.88 million (139 billion 866.65 million soms), or 11.8 percent of the country's GDP. From 2014, the size of the internal debt has been gradually increasing both in nominal terms and as a percentage of GDP. Consequently, the payments on it are also increasing.
From 1998 to 2023, our republic spent 179 billion 494.6 million soms on payments on the internal state debt. In the next seven years, the country will pay almost 20 percent more on internal debts than before. The highest expenses will be from 2026 to 2028. During this period, payments will exceed 100 billion soms.
Ministry of Finance notes that from 2024 to 2028, external borrowings will dominate the overall loan portfolio. However, the state's debt policy will focus on increasing internal borrowings by developing the market for long-term government securities.
The Ministry of Finance promises that servicing the internal state debt of the Kyrgyz Republic will be carried out in a timely and complete manner. To ensure the stability of the state debt, the Cabinet of Ministers regularly monitors its size, structure, and risks, and ensures further improvement of all budgetary indicators of debt sustainability in accordance with established international norms. Repayment of government securities is structured in such a way that the principal amount is paid at the end of the security's term on the last payment date. All funds necessary to service the securities are provided in the republican budget for the corresponding year. Expenditures on servicing the government debt, including internal debt, are considered first-priority, mandatory, and obligatory, as concluded by the Ministry of Finance.
