Government Rejects Debt Relief
Government Rejects Debt Relief
Kyrgyzstan’s refusal to join the HIPC debt relief programme will make servicing its foreign debt very difficult, suggest observers.
On February 20, the Kyrgyz government voted not to join the Heavily Indebted Poor Countries Initiative, HIPC, a programme developed by the World Bank and International Monetary Fund.
The decision ended two years of public debate on the issue.
To participate in the programme - which would have halved the country’s foreign debt by wiping one billion US dollars off the slate - Kyrgyzstan would have to implement far-reaching economic reforms and improve management of its civil service.
Heated economic and political debates on the HIPC issue have raged since March 2006, when the government, then headed by prime minister Felix Kulov, officially said it was interested in taking part in the programme.
A public outcry ensued and a number of NGOs, public figures, representatives of political parties and members of parliament protested and demonstrated against the proposal.
The government reacted by postponing the decision on whether to join the HIPC Initiative until now.
The “no” camp have the rejection they wanted, but how will Kyrgyzstan service its foreign debt without the programme?
Former agriculture minister Jumakadyr Akeneev thinks the country can pay off its debt independently by exploiting natural resources more efficiently.
Kyrgyzstan has the opportunity to get 70 to 80 billion dollars in annual budget revenue for its energy exports and 60 to 70 billion dollars from tourism, says Akeneev.
Other commentators like member of parliament Kubatbek Baibolov think the solution lies in smashing the grey economy.
“According to experts, over 20 billion dollars is concentrated [here]. The government should work on reducing the shadow economy and corruption,” he said.
Kyrgyzstan’s ability to service its debt will require stricter stewardship of the economy, according to Toktogul Kakchekeev, spokesman for the prosecutor general’s office.
“A lot depends on the president and government of Kyrgyzstan. If they are able to introduce stricter rules on timely tax payments, significantly reduce state spending and tighten up state administrative systems, Kyrgyzstan will probably be able to service its foreign debt,” he said.
However, Sapar Orozbakov, director of Bishkek-based Centre for Economic Analysis, suggests that the current leadership is not in a position to implement the reforms required for this to happen.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
On February 20, the Kyrgyz government voted not to join the Heavily Indebted Poor Countries Initiative, HIPC, a programme developed by the World Bank and International Monetary Fund.
The decision ended two years of public debate on the issue.
To participate in the programme - which would have halved the country’s foreign debt by wiping one billion US dollars off the slate - Kyrgyzstan would have to implement far-reaching economic reforms and improve management of its civil service.
Heated economic and political debates on the HIPC issue have raged since March 2006, when the government, then headed by prime minister Felix Kulov, officially said it was interested in taking part in the programme.
A public outcry ensued and a number of NGOs, public figures, representatives of political parties and members of parliament protested and demonstrated against the proposal.
The government reacted by postponing the decision on whether to join the HIPC Initiative until now.
The “no” camp have the rejection they wanted, but how will Kyrgyzstan service its foreign debt without the programme?
Former agriculture minister Jumakadyr Akeneev thinks the country can pay off its debt independently by exploiting natural resources more efficiently.
Kyrgyzstan has the opportunity to get 70 to 80 billion dollars in annual budget revenue for its energy exports and 60 to 70 billion dollars from tourism, says Akeneev.
Other commentators like member of parliament Kubatbek Baibolov think the solution lies in smashing the grey economy.
“According to experts, over 20 billion dollars is concentrated [here]. The government should work on reducing the shadow economy and corruption,” he said.
Kyrgyzstan’s ability to service its debt will require stricter stewardship of the economy, according to Toktogul Kakchekeev, spokesman for the prosecutor general’s office.
“A lot depends on the president and government of Kyrgyzstan. If they are able to introduce stricter rules on timely tax payments, significantly reduce state spending and tighten up state administrative systems, Kyrgyzstan will probably be able to service its foreign debt,” he said.
However, Sapar Orozbakov, director of Bishkek-based Centre for Economic Analysis, suggests that the current leadership is not in a position to implement the reforms required for this to happen.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
