The Ministry of Finance is expected to issue securities in a form of bills to address a 300 million somoni public debt. The bills will be issued with a maturity of five years and an annual interest rate of 2.0 percent.
Finance Minister Faiziddin Qahhorzoda remarked this today while presenting government’s proposal on issuing securities for addressing the public debt to lawmakers.
According to him, the earned funds will be used to cover the national budget deficit.
The minister noted that the abovementioned securities were one of sources to attract additional funds to the national economy, in particular, to cover the national budget deficit.
Qahhorzoda stressed that the government, in turn, guarantees service and purchase of these securities in the future.
The minister noted that with introduction of those bills a total amount of the internal debt will reach 7.2 billion somoni, which is equal to 8.9 percent of the country’s gross domestic product (GDP).
In general, attraction of these funds will not have a significant effect on the total amount of the public debt, Qahhorzoda added.
According to the data from the Ministry of Finance, the internal debt has amounted to 6.9 billion somoni as of January 1, 2020 and the country’s external debt has reached nearly 2.9 billion USD as of January 1, 2020, which is 9.9 percent and 35.8 percent of the country’s GDP respectively.
Internal debt or domestic debt is the part of the total government debt in a country that is owed to lenders within the country. Internal government debt's complement is external government debt. Commercial banks, other financial institutions etc. constitute the sources of funds for the internal debts.
Internal public debt owed by a government (money a government borrows from its citizens) is part of the country's national debt. It is a form of fiat creation of money, in which the government obtains finance not by creating it de novo, but by borrowing it. The money created is in the form of treasury securities or securities borrowed from the central bank.
