Patriotism Won't Pay the Bills
Patriotism Won't Pay the Bills
Plans for Kyrgyzstan to join an international debt relief programme have led to street protests and a campaign to raise funds to pay off the nation’s creditors, but neither effort is likely to have any impact when the only real solution is to get the debt written off.
December 12 saw continued demonstrations in the Kyrgyz capital Bishkek against the proposal to join the Heavily Indebted Poor Countries Initiative (HIPC) programme, a scheme run by the World Bank and International Monetary Fund to reduce the debt burden of the poorest countries.
In a repeat of last week’s events, activists of the Anti-HIPC Movement, who numbered 300 people this time, spattered the offices of the World Bank and the National Bank of Kyrgyzstan with eggs and set fire to an effigy of a senior banker.
Meanwhile, a campaign is under way to collect money to pay off Kyrgyzstan’s foreign debt. A special fund has been set up and by December 11 it contained 1.5 million soms, or 39,000 US dollars. The biggest single contribution came from Kyrgyz businessman Jumabek Toktogaziev, who gave one million soms, or 26,000 dollars.
Although analysts commend the patriotic spirit behind the fund-raising effort, they seriously doubt it can raise anything like the two billion dollars that would be needed to wipe out Kyrgyzstan’s external debt without resorting to HIPC or other debt reduction instruments. For comparison, the sum is equivalent to 80 per cent of the country’s annual gross domestic product.
Economist Jyldyz Sarybaeva said the plan was unrealistic, and the public could not be expected to find the kind of money needed to cover debt service and repayment.
Instead, she said, the government must find its own solution. One option would be debt conversion, where part of the sum owed might be exchanged for a share in implementing various projects, including sustainable development and environmental programmes.
Ernis Abdurazakov, who heads the finance ministry’s debt service department, said that if the government is to free up more money to service sovereign debt, it will have to wage war on the shadow economy and rationalise spending through public-service job cuts. But such measures will not enough to allow the country to decide against the HIPC scheme.
He noted that under HIPC, up to half of Kyrgyzstan’s external debt could be written off if the country meets its obligations. “Economically, we will reap many benefits if we join HIPC,” he said.
Abdurazakov proposed that the public funds that are collected could be used instead to support the social sector, which is likely to get decreasing amounts of government expenditure if debt payments are sustained at present levels.
Kyrgyzstan first considered joining the HIPC programme back in 2000, but the government of the day rejected the idea. In October 2005, President Kurmanbek Bakiev revived the scheme, and in March 2006 the government formally expressed interest in signing up to the scheme.
That announcement immediately drew hostile fire: non-government organisations, public figures, political parties and members of parliament all spoke out against it.
NBCentralAsia commentators have argued that the reason why the public is so hostile to the idea is that the reasons for joining HIPC and the potential benefits have never been fully explained, either to leading opponents of the plan or to the population in general.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
December 12 saw continued demonstrations in the Kyrgyz capital Bishkek against the proposal to join the Heavily Indebted Poor Countries Initiative (HIPC) programme, a scheme run by the World Bank and International Monetary Fund to reduce the debt burden of the poorest countries.
In a repeat of last week’s events, activists of the Anti-HIPC Movement, who numbered 300 people this time, spattered the offices of the World Bank and the National Bank of Kyrgyzstan with eggs and set fire to an effigy of a senior banker.
Meanwhile, a campaign is under way to collect money to pay off Kyrgyzstan’s foreign debt. A special fund has been set up and by December 11 it contained 1.5 million soms, or 39,000 US dollars. The biggest single contribution came from Kyrgyz businessman Jumabek Toktogaziev, who gave one million soms, or 26,000 dollars.
Although analysts commend the patriotic spirit behind the fund-raising effort, they seriously doubt it can raise anything like the two billion dollars that would be needed to wipe out Kyrgyzstan’s external debt without resorting to HIPC or other debt reduction instruments. For comparison, the sum is equivalent to 80 per cent of the country’s annual gross domestic product.
Economist Jyldyz Sarybaeva said the plan was unrealistic, and the public could not be expected to find the kind of money needed to cover debt service and repayment.
Instead, she said, the government must find its own solution. One option would be debt conversion, where part of the sum owed might be exchanged for a share in implementing various projects, including sustainable development and environmental programmes.
Ernis Abdurazakov, who heads the finance ministry’s debt service department, said that if the government is to free up more money to service sovereign debt, it will have to wage war on the shadow economy and rationalise spending through public-service job cuts. But such measures will not enough to allow the country to decide against the HIPC scheme.
He noted that under HIPC, up to half of Kyrgyzstan’s external debt could be written off if the country meets its obligations. “Economically, we will reap many benefits if we join HIPC,” he said.
Abdurazakov proposed that the public funds that are collected could be used instead to support the social sector, which is likely to get decreasing amounts of government expenditure if debt payments are sustained at present levels.
Kyrgyzstan first considered joining the HIPC programme back in 2000, but the government of the day rejected the idea. In October 2005, President Kurmanbek Bakiev revived the scheme, and in March 2006 the government formally expressed interest in signing up to the scheme.
That announcement immediately drew hostile fire: non-government organisations, public figures, political parties and members of parliament all spoke out against it.
NBCentralAsia commentators have argued that the reason why the public is so hostile to the idea is that the reasons for joining HIPC and the potential benefits have never been fully explained, either to leading opponents of the plan or to the population in general.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
