RESTRUCTURING KYRGYZSTAN’S EXTERNAL DEBT: OPPORTUNITY ANALYSIS
Abstract
Under the republic’s development strategy, by 2010 the annual rate of investment in its economy is to go up to 17% of GDP. This target is to be achieved with a significant reduction in public investment (by more than half) and a much greater influx of private funds. The need to address this complicated task is due to the difficulties of servicing the republic’s external debt, which impedes the solution of a number of domestic problems, including problems in the social sphere, since it narrows down the possibilities for state budget spending. So, matters of restructuring and servicing external debt are now among the main problems facing the country’s economy.
In the first few years of independent statehood, the country resorted to foreign borrowing in view of the objective need to maintain its economic independence in the conditions of an acute shortage of financial resources caused by the cessation of transfers from the Union center.
The most burdensome commercial loans were received by the republic in the early 1990s from the European Commission, and also from Turkey, Pakistan and Russia. That was also when a part of the debts of state-owned enterprises on correspondent accounts (for 1992-1993) were posted to the country’s ex-ternal debt. It was only after Kyrgyzstan’s accession to international financial institutions (1993-1994) that it was enabled to obtain loans from them on preferential terms. At that time, the republic also began to receive aid from donor countries (Japan, Germany, Switzerland and others) within the framework of bilateral cooperation.
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IMF program for reducing poverty and fostering economic growth.
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