EBRD 2023: Bullish Kyrgyzstan mulls IPOs, new loans for development

EBRD 2023: Bullish Kyrgyzstan mulls IPOs, new loans for development
/ bne IntelliNews
By bne IntelliNews May 17, 2023

Kyrgyzstan is considering raising money to finance major investment projects while the Central Asian country is also mulling the privatisation of state-owned companies, Deputy Chairman of the Cabinet of Ministers Edil Baisalov told the European Bank for Reconstruction and Development (EBRD) annual meeting in Samarkand on May 16. 

At a session dedicated to Kyrgyzstan, Baisalov sought to reassure investors that the country is a safe and financially stable destination. Investors were rattled by the country’s third post-independence revolution in 2020, which was followed by the nationalisation of its largest asset, the Kumtor gold mine. 

“We are going to start taking more loans for our development,” Baisalov told the panel.

He also disclosed that Kyrgyzstan is “discussing quite a few privatisation projects”, as well as considering IPOs and Eurobond issues. 

“These projects are two to three years ahead, but I want to reiterate that the Kyrgyz Republic is under new leadership, there is momentum of growth and hope,” Baisalov said. 

Bishkek is also looking to its eastern neighbour China for investment into major infrastructure projects. Central Asian leaders, including Kyrgyzstan’s President Sadyr Japarov, are due to visit Beijing this week. 

According to Baisalov, the most important issue to be discussed is the planned China-Kyrgyzstan-Uzbekistan (CKU) railway, but Japarov is also expected to sign an agreement on Chinese investment into renewables in Kyrgyzstan. 

Baisalov talked of a turnaround in the country’s finances following concerns voiced by analysts and other observers about the debt burden and financial sustainability. 

“Analysts were warning about an impending foreign debt servicing problem that was going to peak in the next few years,” he told the panel. 

“But our president just a few hours ago told [Kyrgyz news agency] Kabar it’s not a problem. We're looking at a debt to GDP ratio of less than 40%. And we are very confident in our future … just a few years ago we were looking at austerity measures, and now we don’t even feel that [the debt burden], thanks to new resources we have on hand.” 

This contrasts with a warning from the International Monetary Fund (IMF) in December 2022 that without fiscal consolidation, Kyrgyzstan’s public debt will rise gradually from 58% of GDP in 2022 to 61% of GDP by 2027.

The increase in revenues is likely partly linked to Kumtor, but Baisalov also outlined other steps the government has taken, resulting, he said, in a doubling of revenues since 2021. 

“In two years we succeeded in doubling state revenue. This was done by good governance, walking the walk. Effective administration, stronger management, transparency, without introducing a single new tax, just by improving administration [of] customs and tax, and management of our national treasures. This year we had KGS500bn [$5.7bn] of total revenue; in 2021 it was twice less.” 

This enabled the government to hike public sector salaries, including for teachers, who are in strong demand given Kyrgyzstan’s fast-growing, youthful population.