Domestic debt increased by tens of billions of KGS

The total amount of Kyrgyzstan's public debt as of 31 August was 758.6 billion KGS, or $8.65 billion. Over the month, it grew by $238.99 million. Moreover, the growth was due to internal debt, while external debt actually decreased (by 490 million KGS).

According to the Ministry of Finance, the volume of domestic debt increased from 277.6 billion KGS on 31 July to 298.5 billion KGS on 31 August, i.e. by almost 21 billion KGS. The increase in the volume of government treasury bonds played a major role.

The republic's liabilities in these bonds at the end of August were estimated at 295.7 billion soms. The state owes another 2.7 billion KGS on 12-month treasury bills. As a result, the share of domestic liabilities in the total public debt reached 39.5% compared to 37.8% in July.

Thus, the main source of public debt growth is the issuance of government securities used to finance budgetary obligations. As a result, the share of domestic debt in the structure of public debt increased from 37.8% in July to 39.5% in August.

At the same time, domestic debt continues to grow. At the beginning of last week, the debt in treasury bonds placed on the National Bank's platform reached 291.49 billion KGS. This takes into account the growth of 870 million KGS on 17 October.

According to the National Bank of the Kyrgyz Republic, the growth in domestic debt was due to an increase in the issuance of 3-year and 7-year bonds. The volume of 3-year securities in circulation grew by 260 million KGS to 58.7 billion KGS, and 7-year securities grew by 610 million KGS to 59.4 billion KGS.

The placement of the two types of securities took place on 17 October. The Ministry of Finance raised money at 12.86% on 3-year securities, but the amount turned out to be three times less than planned (800 million KGS). Not all of the 7-year securities were placed either, only half, 610 million KGS out of 1.2 billion. The funds were raised at 15.25%.

Despite the fact that domestic borrowing rates remain higher than external ones, the Cabinet of Ministers continues to actively use the domestic market to finance current accounts and projects. This approach is aimed at reducing currency risks by stabilising the debt burden amid fluctuations in the dollar exchange rate and reducing dependence on external creditors.