Kyrgyzstan Announces Capability to Pay Off External Debt in One Day; Foreign Exchange Reserves Exceed $8.5 Billion

Kyrgyz President Sadyr Japarov's speech to the Supreme Parliament demonstrated the confidence and prudence of a Central Asian nation on its path to economic self-reliance.

"We could indeed pay off our external debt in one day, but that wouldn't be economically worthwhile," President Japarov stated during his address to the Supreme Parliament. The leader indicated that while the republic possesses the fiscal capacity to fully repay its external debt in the shortest possible time if necessary, such an action lacks economic merit and violates the principles of rational fiscal management.

Japarov emphasized to the parliamentarians, "There is no danger to the economy." He cited data demonstrating the country's financial stability—currently, its gold and foreign exchange reserves exceed $8.5 billion, compared to just over $2 billion five years ago.

According to the latest information, the Kyrgyz Republic's total national debt is approximately $8.6 billion, of which about $5.2 billion is external debt, with the remainder being domestic debt. This debt structure is considered manageable, and the repayment schedule is designed to avoid peak pressure on the budget.

01. Significant Improvement in Debt Situation

President Japarov listed the substantial decline in the external debt-to-GDP ratio as one of the most important achievements in recent years. This ratio, which reached approximately 54% in 2020, has now fallen to about 25%, meeting internationally recognized safe levels.

Behind this achievement is the strong performance of the Kyrgyz economy. In the first half of 2025, Kyrgyzstan's GDP grew by 11.7% year-on-year, a further expansion compared to the same period of the previous year. Construction grew by 42.5%, and industry by 9.8%.

According to data from the Eurasian Economic Commission, Kyrgyzstan achieved leading growth in several key economic sectors of the Eurasian Economic Union in 2025. Construction growth was particularly significant, reaching 88.4%, ranking first in the Union. Industrial output grew by 13.8%, and retail sales grew by 24.6%, both the highest levels in the Union.

President Japarov clearly stated that the country is fully capable of repaying its external debt and plans to completely eliminate accumulated external debt by 2035. He pointed out, "With the advancement of major projects and the continuous increase in investment, the country's GDP will grow even faster."

02 Debt Management Strategy

Zhaparov pointed out that claims about debt threatening the Kyrgyz economy are unfounded. He stated that the country consciously follows a strategy of phased service and repayment of loans because early full repayment of debt would lead to additional expenditures. This mainly refers to the high interest payments and penalties that may arise under the terms of international credit agreements.

Kyrgyzstan's debt repayment plan is orderly and practical. According to the plan, $344 million will be repaid in 2023, $400 million in 2024, $430 million in 2025, and $390 million in 2026. By 2030, Kyrgyzstan will have repaid most of its external debt.

This phased repayment strategy avoids the penalties and additional costs that may result from early repayment, reflecting the principle of rational management of national finances.

Economists emphasize that the current policy objective of the authorities is not to reject borrowing itself, but to purposefully use it for infrastructure and investment projects that can guarantee long-term economic growth.

03. Diversified Economic Development

Kyrgyzstan has maintained rapid economic growth for many consecutive years, consistently ranking first in GDP growth among CIS countries. In the first eight months of 2025, Kyrgyzstan's GDP reached 1.0421 trillion soms (approximately US$11.9 billion), a year-on-year increase of 11.0%.

Economic growth is primarily driven by the industrial, construction, and service sectors. The goods-producing sector grew by a remarkable 13.7%, while services and net product taxes increased by 9.5% and 10.8%, respectively. Sub-sectors such as manufacturing, food and beverage, tobacco, chemicals, rubber and plastics, and building materials achieved double-digit growth, with the pharmaceutical industry growing by a staggering 2.2 times.

The service sector remains the dominant sector in Kyrgyzstan's economy and maintains stable growth. In the first eight months of 2025, the service sector's output reached 808.6 billion soms, a year-on-year increase of 9.9%, accounting for 50.7% of GDP.

The rapid growth of the service sector is attributed to improved living standards. From January to July 2025, consumer loans increased by 45.3%, the average nominal monthly household salary increased by 20.4%, and the average pension increased by nearly 14.2% year-on-year.

04 Economic Stimulus from Major Projects

Zhaparov mentioned that the advancement of major projects will further boost the country's economic growth rate. These major projects include the Kambar Ata Hydropower Station and the China-Kyrgyzstan-Uzbekistan Railway, which will effectively promote economic development and enhance debt repayment capacity.

Zhaparov likened the China-Kyrgyzstan-Uzbekistan Railway to a "channel connecting two economic oceans," indicating that this Central Asian country is ushering in unprecedented development opportunities. These large-scale projects not only improve infrastructure but also create numerous jobs and promote regional development.

Over the past three years, Kyrgyzstan's per capita GDP has increased by 85%, exceeding the growth rate of other Central Asian countries such as Uzbekistan. With the steady progress of major international cooperation projects, Kyrgyzstan's economy is expected to achieve an 8% growth rate in 2025.

According to the Eurasian Stability and Development Fund's assessment, such rapid growth also presents hidden risks. When domestic demand exceeds production capacity, economic "overheating" can occur, leading to inflation and macroeconomic imbalances.

As of July 18, 2025, Kyrgyzstan's inflation rate reached 8.7%, exceeding the target range of 5% to 7% set by the National Bank of Kyrgyzstan.

05 Creditor Structure and International Cooperation

Kyrgyzstan's main creditors remain international financial institutions and bilateral partners, including the Asian Development Bank, the World Bank, and the Export-Import Bank of China.

According to data from March 2025, the Export-Import Bank of China is Kyrgyzstan's largest bilateral lending institution, accounting for more than 35% of its total external debt. These loans are mainly used to finance infrastructure projects as part of China's Belt and Road Initiative.

China's share of Kyrgyzstan's external debt rose sharply from 2% to 44% between 2018 and 2020, primarily due to new loans during the pandemic and the post-pandemic recovery phase.

Russia is also an important partner of Kyrgyzstan. Through the Russia-Kyrgyzstan Development Fund and the Eurasian Stability and Development Fund, Kyrgyzstan received approximately $630 million in funding for infrastructure and small and medium-sized enterprise (SME) development between 2023 and 2027.

As a member of the Eurasian Economic Union, Kyrgyzstan's exports grew from $1.5 billion in 2015 to $3 billion in 2024-2025, with approximately 70% of Kyrgyz exports absorbed by Russia and Kazakhstan.

06 Fiscal Reserves and Risk Management

To demonstrate the country's financial stability, Zhaparov cited the dramatic increase in gold and foreign exchange reserves. These reserves now exceed $8.5 billion, compared to just over $2 billion five years ago. This growth is attributed to increased export revenue, strengthened budgetary discipline, rising gold mining revenue, and improved tax administration.

The National Bank of Kyrgyzstan has also taken proactive measures in managing its foreign exchange reserves. In August 2020, gold and foreign exchange reserves reached $3.082 billion, the highest level since the National Bank's establishment, sufficient to meet 6.5 months of import needs.

Through policy adjustments, Kyrgyzstan has significantly reduced the proportion of US dollars in its credit sector: from 70% in 2014 to 32% in 2020; during the same period, the proportion of US dollar deposits decreased from 70% to 42%.

Since 2017, Kyrgyzstan has completely banned the use of US dollars for mortgages and consumer loans to reduce foreign exchange risks for its citizens. Currently, Kyrgyzstan is exploring access to China's Cross-border Interbank Payment System (CIPS) to enhance its cross-border settlement capabilities.

The Eurasian Stabilization Fund predicts that Kyrgyzstan's economic growth will slow to 6.4% by 2026 and further decline to 5.5% by 2028. Despite the slowdown, this growth rate remains significantly higher than that of many developed countries.

With the advancement of large-scale projects such as the Kambarata Hydropower Station and the China-Kyrgyzstan-Uzbekistan Railway, Kyrgyzstan is playing an increasingly important role in the Belt and Road Initiative. These projects not only enrich the budget but also drive leapfrog development in infrastructure, creating thousands of new jobs.

Kyrgyzstan's debt repayment capacity is built on its economic growth and fiscal reserves. President Japarov's statements send a clear signal to both domestic and international audiences: this Central Asian country is managing its national finances with confidence and prudence, moving towards a path of sustainable economic development.