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RESOLUTION OF THE CABINET OF MINISTERS OF THE KYRGYZ REPUBLIC

of July 1, 2022 No. 357

About approval of Strategy of national debt management of the Kyrgyz Republic for 2022-2024

For the purpose of effective management of public debt of the Kyrgyz Republic, according to articles 13, of the 17th constitutional Law of the Kyrgyz Republic "About the Cabinet of Ministers of the Kyrgyz Republic" the Cabinet of Ministers of the Kyrgyz Republic decides:

1. Approve the Strategy of national debt management of the Kyrgyz Republic for 2022-2024 according to appendix.

2. Declare invalid the order of the Government of the Kyrgyz Republic "About approval of Strategy of national debt management of the Kyrgyz Republic for 2020-2023" of August 4, 2020 No. 409.

3. This resolution becomes effective after ten days from the date of official publication.

Chairman of the Cabinet of Ministers of the Kyrgyz Republic

A. Zhaparov

Appendix

to the Resolution of the Cabinet of Ministers of the Kyrgyz Republic of July 1, 2022 No. 357

The strategy of national debt management of the Kyrgyz Republic for 2022-2024

Chapter 1. Introduction

This Strategy of national debt management of the Kyrgyz Republic for 2022-2024 (further - Strategy) is developed for the purpose of effective management of public debt of the Kyrgyz Republic and represents the mid-term plan of actions of the Cabinet of Ministers of the Kyrgyz Republic aimed at providing requirements of the Cabinet of Ministers of the Kyrgyz Republic for financing by means of attraction of borrowed funds.

Chapter 2. Purposes and tasks of national debt management

Main objectives of national debt management of the Kyrgyz Republic are:

- ensuring requirements of the Cabinet of Ministers of the Kyrgyz Republic for financing by means of borrowing with the smallest costs and reasonable risk level;

- market development of government securities of the Kyrgyz Republic;

- maintenance of stability of public debt.

Chapter 3. Strategy scope

This Strategy regulates questions of national debt management of the Kyrgyz Republic, and also guarantees of the Cabinet of Ministers of the Kyrgyz Republic. Debt obligations of National Bank of the Kyrgyz Republic and municipal authorities of the Kyrgyz Republic do not fall within coverage of this Strategy.

Measures and target indicators of this Strategy extend to the period of 2022-2024. Annual updating of Strategy taking into account change of macroeconomic indicators, parameters of budget tax policy and dynamics in the domestic and international financial markets will be led if necessary.

Chapter 4. External debt

New external borrowings will be attracted on the most priority programs and projects which will promote economic growth.

The Cabinet of Ministers of the Kyrgyz Republic will continue policy of attraction only of preferential external state borrowings: new external credits will be attracted with respect for the minimum value grant element in 35 percent.

In case of projects implementation of the state investments due to attraction of loans from several sources or combination of loans to grant means calculation of level of lgotnost taking into account all the raised borrowed and/or grant funds (the integrated grant element) is allowed. Value united grant element shall make at least 35 percent also.

Decrease in the potential risks integrated to excessive concentration of external debt will be performed by establishment and observance of quantitative restriction of external debt before one creditor - no more than 45 percent of total amount of external debt.

Considering the current level of debt burden and possible challenges of stability of debt of the Kyrgyz Republic following from this, understanding the nature and scales of the potential costs and risks connected with implementation of the state borrowings in the international market of the capital, the Cabinet of Ministers of the Kyrgyz Republic will refrain from release and placement of foreign currency bonds in the foreign financial markets.

Servicing of the public external debt of the Kyrgyz Republic will be carried out timely and in full. In this regard zero value on assumption of delay of payments in servicing of the current obligations on external debt is established.

The Cabinet of Ministers of the Kyrgyz Republic will continue work on restructuring and/or reducing external debt of the Kyrgyz Republic within available mechanisms, including transactions on conversion of debt, as in multilateral, and bilateral formats.

Chapter 5. Internal debt

Attraction of the state internal borrowings will be made only by means of release and placement of government securities (the government treasury bonds and the state treasurer bills of exchange) through market mechanisms of pricing, in particular, through auctions.

Considering the achieved results on increase in circulation period of government securities which led to considerable improvement of resistance of portfolio of internal debt to risk of refinancing, the Cabinet of Ministers of the Kyrgyz Republic will make efforts on decrease in indicators of costs of the public internal debt. In particular, the urgent structure of the offered government securities will be determined proceeding from reason of minimization of costs, taking into account preferences of participants of the market of government securities to a large extent, and also the current situation in the financial market. At the same time, the Cabinet of Ministers of the Kyrgyz Republic will support the offer of long-term government treasury bonds (with circulation periods 10, 15 and 20 years).

Servicing of the public internal debt of the Kyrgyz Republic will be carried out timely and in full. In this regard zero value on assumption of delay of payments in servicing of the current obligations on internal debt is established.

For goal achievement of market development of government securities of transaction on management of the public internal debt will be performed with respect for the principles of transparency, simplicity and liquidity and to provide the following measures:

- implementation of practice of publication of quarterly calendar of issue;

- carrying out regular consultations of participants of the market of government securities.

Chapter 6. Development of infrastructure of the state borrowings

The Cabinet of Ministers of the Kyrgyz Republic will take measures for the fastest installation and start of new system (database) of accounting of public debt allowing to accumulate, store and analyze data on public debt in the integrated format.

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