Foreign Debt Under Control
Foreign Debt Under Control
Although Tajikistan’s foreign debt will top one billion US dollars next year, NBCentralAsia economic experts say the debt burden is manageable. They recommend reducing the amount of new loans and instead seeking foreign direct investment, FDI, in major projects.
According a November 14 report by the Avesta news agency, when new lending is taken account, the foreign debt of the country will rise to over a billion dollars – or 33 per cent of projected gross domestic product, GDP - from the current figure of 830 million.
NBCentralAsia commentators say that since export revenues – which finance external debt repayments – are rising, there is no need to worry about the debt situation.
“It does not represent a significant danger for the government budget,” an expert at the Tajik finance ministry told NBCentralAsia. “It would be alarming if the external debt rose to over 40 per cent of GDP.”
According to an independent economist based in Dushanbe, external debt is not excessive given the country’s economic prospects, and much of it consists of long-term concessionary borrowing, largely from the international financial institutions, IFIs.
But NBCentralAsia’s commentators say the government must remain vigilant. Debt service payments for 2006 will eat up about 42 million dollars, and these payments are set to rise year by year. In 2007, Tajikistan will have to start repaying capital as well as interest.
Economists recommend that borrowing should be gradually replaced by foreign direct investment so as to prevent the debt burden becoming unmanageable. At the same time, bilateral negotiations should continue being used to press major creditors to write off some of the debt.
Any new borrowing should be for projects that will rapidly recoup their costs, so that repayment is not a problem. And finally, the experts say, the Tajik government should refuse to provide guarantees for commercial loans taken out by private businesses.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
According a November 14 report by the Avesta news agency, when new lending is taken account, the foreign debt of the country will rise to over a billion dollars – or 33 per cent of projected gross domestic product, GDP - from the current figure of 830 million.
NBCentralAsia commentators say that since export revenues – which finance external debt repayments – are rising, there is no need to worry about the debt situation.
“It does not represent a significant danger for the government budget,” an expert at the Tajik finance ministry told NBCentralAsia. “It would be alarming if the external debt rose to over 40 per cent of GDP.”
According to an independent economist based in Dushanbe, external debt is not excessive given the country’s economic prospects, and much of it consists of long-term concessionary borrowing, largely from the international financial institutions, IFIs.
But NBCentralAsia’s commentators say the government must remain vigilant. Debt service payments for 2006 will eat up about 42 million dollars, and these payments are set to rise year by year. In 2007, Tajikistan will have to start repaying capital as well as interest.
Economists recommend that borrowing should be gradually replaced by foreign direct investment so as to prevent the debt burden becoming unmanageable. At the same time, bilateral negotiations should continue being used to press major creditors to write off some of the debt.
Any new borrowing should be for projects that will rapidly recoup their costs, so that repayment is not a problem. And finally, the experts say, the Tajik government should refuse to provide guarantees for commercial loans taken out by private businesses.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
