The Prime Minister of Kyrgyz Republic, Amangeldy Muraliev, believes Kyrgyzstan’s external debt payment situation has reached a crucial point. The Kyrgyz government has to mobilize all possibilities to prevent the country from defaulting on its external debt. The government has decided to maximally decrease foreign donor credit as a means to decrease the size of its external debt. At the beginning of this year, the external debt was 136% of the GDP. The government has planned that for the budget 2000, 40% of state income will go toward fulfilling debt obligations. Experts evaluate this plan as leading to "death for Kyrgyzstan".

Kyrgyzstan’s external debt is approximately US $1.7 billion. Experts evaluate the current situation as "crucial". The 1999 balance of payments data prepared by specialists of National Bank of the Kyrgyz Republic, shows that the major part of its external debt is the result of state external borrowings. The external debt continues to rise and currently amounts to US $1.5 billion. The largest part of the US $1.5 billion state external is from project credit obligations directed toward structural reforms. State investment programs provided for various economic has taken US $320 million. The state credit debt has reached US $50 million. Credit obligations taken out of the State Investment Program account for US $230 million. The private sector borrowed more than US $300 million from foreign investors. Kyrgyzstan’s financial obligations to the International Monetary Fund that is serviced by National Bank of the Kyrgyz Republic has reached US $192 million.

Basic creditors for Kyrgyzstan apart from the IMF include the World Bank and the Asian Development Bank. One of the main creditors is Russia which has lent Kyrgyzstan since the beginning of year 2000 a total of US $157 million. There are 19 projects funded by US $503 million of credit from the World Bank. World Bank credits are considered the most privileged as they are provided at a 0.75% annual rate over a ten-year period. Kioshi Koder, the chief of World Bank for Kazakhstan and Kyrgyzstan, says that if the government of Kyrgyz Republic could efficiently use theses credits received from the World Bank, then it could return the credits in the fixed period of time. However, there rumors are growing in Kyrgyzstan that World Bank and IMF credits are pulling the country into a bottomless pit of debt.

Last year, after the continuation of project financing for a three year IMF program to alleviate the nation’s poverty, borrowing by the National Bank of the Kyrgyz Republic have raised considerably. In general, during the year 1993-1999, the IMF has lent US $ 227.6 million to finance projects in Kyrgyzstan, mostly in the form of program credits. The remaining part of funds used for medium sized projects have been financed by European Bank of Reconstruction and Development (EBRD) and other large foreign companies and commercial banks. The Minister of Finance, Sultan Mederov, reported that Kyrgyzstan’s budget has been calculated so that it can prevent from default. "The government has developed about 100 projects that will enable Kyrgyzstan to achieve economic stability. If we will be able to fulfill such basic parameters as taxation, budget parameters fulfillment, Kyrgyzstan will get out of its crisis".

Aziz Soltobaev, American University in Kyrgyzstan, Economics department