Central Asia faces rising debt: Kazakhstan and Kyrgyzstan at the forefront

The IMF's forecasts indicate that by 2030, total government debts could reach 100% of global GDP. Experts warn that the future debt burden may exceed current estimates, requiring substantial financial adjustments to stabilize or reduce it.

Many countries face bleak fiscal forecasts due to three primary factors: significant political and social pressure to increase spending, overly optimistic projections regarding debt levels, and a substantial shadow economy contributing to unrecorded debt.

Causes of the Debt Trend

According to the IMF, countries are increasingly allocating funds toward defense and energy security in the context of demographic changes, healthcare demands, the transition to a green economy, climate change adaptation, and rising geopolitical tensions. These factors are significantly influencing the growing levels of national debt.

In this regard, global debt levels could be, on average, 10% higher than currently projected in relation to GDP over the next five years. In the worst-case scenario, global government debt could reach 115% of world GDP within three years, exceeding current forecasts by 20%.

The IMF report suggests that while two-thirds of countries are expected to see their debt stabilize or decline, the overall debt burden remains significantly above pre-pandemic estimates. Countries such as the United States, the United Kingdom, Brazil, France, Italy, and South Africa are expected to continue experiencing increases in national debt.

Central Asia’s Debt Landscape

As of July 1, 2024, Uzbekistan's national debt has risen for the first time to over $37 billion. In recent years, the growth rate of the country’s external debt has accelerated dramatically. For instance, by the end of 2017, Uzbekistan's national debt was recorded at $11.6 billion, which surged to $34.9 billion by the end of 2023, representing a threefold increase.

As of January 1, 2024, the state debt levels and their share of GDP among Central Asian countries are as follows:

• Kazakhstan: $59.8 billion, 23% of GDP ($259.3 billion)
• Uzbekistan: $34.9 billion, 34.4% of GDP ($101.6 billion)
• Kyrgyzstan: $6.2 billion, 45.2% of GDP ($13.7 billion)
• Tajikistan: $3.6 billion, 30.2% of GDP ($12.1 billion)
• Turkmenistan: Approximately $3.8 billion, 5% of GDP ($75.4 billion)

Under the "Law on State Debt," Uzbekistan has established a maximum debt limit of 60% of GDP. This threshold is 27% for Kazakhstan, 70% for Kyrgyzstan, and Tajikistan is recommended to maintain a limit of 60%. There is limited reliable information available regarding Turkmenistan's debt.