National Debt in Central Asia: Risks and Management Approaches

Ivan Nikonov, Stanislav Radionov and Oscar Mukhametov
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Ivan Nikonov: Financial Research Institute of the Ministry of Finance of the Russian Federation, Moscow, Russia
Stanislav Radionov: Financial Research Institute of the Ministry of Finance of the Russian Federation, Moscow, Russia
Oscar Mukhametov: Financial Research Institute of the Ministry of Finance of the Russian Federation, Moscow, Russia

HSE Economic Journal, 2023, vol. 27, issue 4, 550–573

Abstract: One of the global macroeconomic trends of recent years is the increase of public debt by many developed and developing countries. The global cycle of interest rate hikes that began in 2021 poses risks to debt sustainability, especially in developing countries. These trends predetermine the growing relevance of research in the field of public debt sustainability. The paper surveys the state analyzes the main factors of dynamics of the public debt of four Central Asian countries – the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Uzbekistan, the Republic of Tajikistan. It is shown that the state of public debt in these countries is significantly different. Namely, the amount of debt, its structure, as well as approaches to debt management are significantly different. In particular, the paper describes the history of Eurobonds placements by the considered countries and shows that the efficiency of this instrument was significantly different. The paper presents the results of factorial decomposition of the growth of public debt,which allows to evaluate the sources of debt sustainability risks. It is shown that for the Republic of Kazakhstan the main source of risk is the budget deficit, while for the other considered countries it is the devaluation of the national currency. Based on the above analysis, recommendations are made to improve the management of the public debt of the considered countries, which appear to be highly important for the reduction of debt sustainability risks for the considered countries. These recommendations include the clarification of liability accounting methodology, increase of transparency of public debt data, development of a risk assessment system based on the decomposition of debt growth, introduction of fiscal rules or other legal restrictions on debt dynamics, development of the domestic debt market.

Keywords: Central Asia; state debt; debt sustainability; fiscal rules (search for similar items in EconPapers)
JEL-codes: C65 C68 (search for similar items in EconPapers)
Date: 2023
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