Kyrgyzstan’s public debt increased by 0.3% on the month to reach $3.94mn as of the end of May, easing from a 1.8% monthly hike in April, data from the finance ministry showed. The debt rose by 3.4% since the beginning of the year.

The debt increase was driven by the government’s continued borrowing to finance infrastructure projects. One such project is the CASA-1000 power link that envisages Kyrgyzstan and Tajikistan combining their hydropower resources to export excess electricity to Pakistan and Afghanistan during the summer months. Kyrgyzstan is relying on financing from international lenders to co-finance its $233mn share of the $1.17bn project.

The end-May debt accounted for 59.3% of the 2016 GDP forecast, down 63.5% in April because of the appreciation of the Kyrgyz som against the US dollar: a strong som increases the value of the country’s GDP in dollar terms bringing the ratio down.

Foreign debt makes up most of the Kyrgyz public debt and stood at $3.698bn at the end of May, the figures also showed. In monthly terms, the external debt remained broadly unchanged, while it rose by 2.7% since the beginning of the year.

China’s Exim Bank stands as the country’s largest creditor with total outstanding credit worth $1.39bn at the end of May. The World Bank’s International Development Association (IDA) follows with $6412mn, ahead and the Asian Development Bank (ADB) with $582mn.

Public debt has reached worrisome levels and should be contained, the International Monetary Fund (IMF) said in a recent report. “Prudence should be exercised when selecting new infrastructure projects, and contracting and guarantying new public debt. Debt is close to moving from medium to high risk of debt distress, which would reduce access to concessional and nonconcessional borrowing,” the fund points out. The IMF expects the debt-to-GDP ratio to exceed 70% this year and called on the government to implement fiscal tightening measures to stem the debt rise.