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8/9/2019 KYRGYZ - Altynay Bektenalieva
1/25
1
PUBLIC DEBT
OF THE KYRGYZ REPUBLIC
Prepared by A.A. BektenalievaHead of Public Debt Management Unit
of the Public Debt and Assets Department
Kuala Lumpur, November 2009
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Contents
I. Background: public debt in the Kyrgyz Republic
II. Goals of public borrowings
III. Public debt structure IV. Legal framework
V. Measures taken to reduce debt burden
(Reasons and outcomes of applying to the Paris Club)
VI. Public Debt Management Policy in the KyrgyzRepublic
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I . Background: Public Debt in the KyrgyzRepublic
Prior to 1992 - no experience in attracting externalcredits and loans Prior to 1992 - no administrative and institutional
standards for external financing
1992 - Central Bank of Russia provided short-term,interest free technical credits to a number of SICcountries to finance their trading transactions
1993 Russian Government suspended extension oftechnical credits, while already provided loans were
consolidated in convertible currency at marketinterest rate and market ruble exchange rate. CIScountries signed a number of credit agreements.
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Financing of Structural Reforms in the
Kyrgyz Republic by International Financeand Credit Institutions
IMF, WB, EBRD, ADB, IBR Donor countries (Japan, Germany,
Switzerland)
Outcome more than 140 stateenterprises turned into joint-stock
companies
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II . Goals of Public Borrow ings
1. Financing of the state budget deficit
2. Financing of public investments
3. Covering public debt related costs, andrefinancing of public debt
4. For other purposes provided for in the
legislation of the Kyrgyz Republic
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II I. Kyrgyz Republic: Public Debt
Structure(as of 31.12.2008)
Public debt of the Kyrgyz Republic totaled2 319 395 thousand USD, out of which:
(thousand USD)
Bilateral concessionary 414 567
Bilateral non-concessionary 259 594 Multilateral concessionary 1 446 191
Multilateral non-concessionary 1 020
Contingent liabilities 6 513
Domestic debt 191 510
% of GDP - 45,3%Note: Discount rate of the National Bank: 1 USD = 39.4181 soms as of 31.12.2008
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Kyrgyz Republic: Public Debt
Structure31.12.2008
Multilateral
concessionary
62.35%
Bilateral
concessionary
17.87%
Dom es tic debt8.26%
Contingent
liabilities
0.28%
Bilateral
non-concessionary
11.19%
Multilateral
non-concessionary
0.04%
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0
50
100
150
200
250
300
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
..
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Debt currency profile as of the end
of 2008(million USD equivalent and percentage)
262,68
11,3%
191,51
8,3%13,58
0,6%
16,59
303,08
13,1%
1 396,78
60,2%38,38
1,7%
87,66
3,8%
9,14
0,4%
SDR
USD
Local currency
KWD
KRW
JPY
ID
EUR
CNY
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Macroeconomic indicators
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
0,0%
20,0%
40,0%
60,0%
80,0%
100,0%
120,0%
140,0%
Inflation GDP growth Public debt/GDP
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Allocation of External Assistance
in 2008
100.02 295.7Total
0.818.4Environment10
8.9204.9Energy9
3.171.6Private8
33.2763.3
Support to the budget and balance
payments (national currency)7
0.36.0Tourism6
17.4400.5Transport and communications5
11.1254.7Social4
17.9410.1Agriculture and irrigation3
5.1117.9Industry2
2.148.3Public Administration1
% of the
total
Agreed amount
million USDSector
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Public Debt Service Profile
for debt outstanding on 31.12.2008
-
20,00
40,00
60,00
80,00
100,00
120,00
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
.U
SD
Domestic Debt
Bilateral Debt
Multilaterral Debt
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Public Debt Service and
Disbursement in 2008(million USD)
67.0Domestic debt*
*contains items that are borrowed and repaid
several times within the year (e.g. 3,6 months T-
bills)
95.1External debt
116.9Disbursements
63.5Domestic debt*
31.4External debt87.6Principal
18.9Domestic debt
16.3External debt
25.7Interest
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External Debt SustainabilityIndicators
4%7%10%26%14%
External debt service to budget
revenues
3%3%5%19%13%External debt service to export
45%53%66%78%87%External public debt / GDP
20082007200620052004Indicators
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IV. Key regulatory legal acts regulating
public debt managementWe have a legal framew ork for publicdebt management
LAW OF THE KYRGYZ REPUBLICOn Public and Non-public Debt of the Kyrgyz Republic
LAW OF THE KYRGYZ REPUBLIC
On the National Bank of the Kyrgyz Republic
LAW OF THE KYRGYZ REPUBLIC
On Basic Principles of the Treasury of the KR
LAW OF THE KYRGYZ REPUBLIC
On Budget Law Basic Principles in the KR
Public Debt Management Strategy of the KR for 2009-2011, 400, dated June 23, 2009
Country Development Strategy for 2009-2011
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V. Why the Issue of the ExternalDebt Became so Relevant?
Economic reforms in the Kyrgyz Republic, - mainly financedat the expense of external borrowings, - were aimed atimplementation of the Public Investment Program,structural reforms and covering the budget deficit.
As a result, the external public debt increased from 36% tothe GDP in 1995, to 136% - in 1999.
This resulted in the problem with liquidity and debt
sustainability; to solve this problem, the Kyrgyz Republicapplied to the Paris Club requesting for the relief of bilateraldebt.
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Main objective of the Paris Club -1:
Resolution of the medium-term liquidity problem
Outcomes of the PC-1:
Consolidation of payments subject to payment from December
2001 to December 2004, and extension of repayment period
Reduction in the amount of service:
from 109 million USD subject to repayment for 2001-2004 to
7.5 million USD
Debt restructuring under theParis Club in 2002
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Debt Restructuring under theParis Club in 2005
Main objective of the Paris Club-2:
Settlement of the solvency problem for the medium-term period
Outcome of the PC-2:
Reduction in the accumulated bilateral external debt at NetPresent Value (NPV)
Reduction in the amount of debt:
50% at nominal value 20 million USD;
50% at Net Present Value 102 million USD
Extension of the grace period and repayment period
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Measures taken to reduce theexternal debt
As a result of negotiations, a number of bilateral creditorsprovided debt relieve:
Pakistan: 9.58 million USD
China: 6.65 million USD
Germany: 0.78 million euro (debt swap)
India: 1.02 million USD
Russia: 193.5 million USD (part of the debt as a debt-equity swap)
Transactions on swapping the debt for public shares inenterprises, and implementation of projects under Chineseloan (8.12 million USD) and Germany (2.25 million euro)
are under negotiation.
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Measures taken to reduce theexternal debt
In order to reduce the burden of the external debt for
the budget, in compliance with Resolution of the
Government of the KR No. 135- dated 24.05.07,
Peoples Account for Repayment of the External
Debt of the KR was opened with the National Bank
for the national and foreign currencies.
As of 01.10.2009, the total amount in this account
reached: 803 816 soms and 350 US dollars
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Medium-term Public Debt
Management Strategy
The current Medium-term Public Debt Management Strategyis for 2009-2011
The Strategy is aimed at achieving the following results:
Reduce the level and the share of the external public debt; Attract new external borrowings with, at least 35% grant
element (reduction from 45%);
Increase in the share of domestic borrowings in public
debt;
Implementation and strengthening of Risk Management
Developing of secondary market
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DSA. EXTERNAL DEBT SUSTAINABILITY ANALYSIS
The Kyrgyz Republic is rated as a mediumperformer based on the World BanksCountry Performance and Institutional
Assessment Index for low income countries.
The relevant policy-dependent thresholdsfor countries in this category are 40 percentfor the PV of the debt-to-GDP ratio, 150percent for the PV of debt-to-exports ratio,
250 percent for the PV of debt-to-revenueratio, 20 percent of the debt service-to-exports ratio, and 30 percent of the debtservice-to-revenue ratio.
Source: from most recent IMF/WB DSA
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A. Basel ine
The baseline scenario points to a cautiously favorableimprovement in the external debt outlook over time.Already by end-2008, the PV of debt-to-exports and the PV ofdebt-to-revenue ratios, at 43 and 94 percent respectively, werewell below their policy-based indicative thresholds.2 Only the PV
of PPG debt-to-GDP ratio, at 27 percent, is closer to its relevantthreshold of 40 percent in 2008. Over the DSA horizon, all debtratios move steadily on a downward path underpinned bysteady growth, fiscal consolidation, and prudent debt
management.
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Debt service is expected to remain manageablethroughout the DSA horizon. This reflects the highconcessionality of both the outstanding multilateral debt and theassumed new borrowing over the medium term. The PPG debtservice ratio would increase slightly from 3.5 percent of exports
(5.3 percent of revenues) in 2008 to 7.5 percent of exports(11.4 percent of revenues) in 2029, driven by less-concessionalnew borrowing and the repayment of the previouslyrestructured bilateral debt.
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Thank you for the attention!