EurasiaNet.org says that according to the Asian Development Bank (ADB), to maintain their current growth momentum, the five post-Soviet Central Asian republics must invest almost 8 percent of GDP – or $38 billion per year in total – in infrastructure and climate-change mitigation efforts.
For the region’s smaller states, this poses several challenges: Kyrgyzstan and Tajikistan have fewer resources and are extremely dependent on remittances from labor migrants to sustain their economies. Moreover, their governments do not generate enough income to carry out investment on their own. So Bishkek and Dushanbe address funding gaps by borrowing abroad, largely from neighboring China.
According to the International Monetary Fund, total gross external debt (that’s debt a country owes to foreign creditors) as a percentage of GDP for Kyrgyzstan and Tajikistan averaged 91 percent and 59.3 percent respectively between 2000 and 2014, and was estimated at 77.5 percent and 67.9 percent in 2017.
Tajikistan’s external debt is projected to keep rising in 2018 and 2019 as the government ramps up construction of the Roghun dam and other infrastructure projects.
Such borrowing could be unsustainable for Tajikistan and Kyrgyzstan, according EurasiaNet.org.
As a percentage of gross national income (a measure that, unlike GDP, includes remittances and thus better captures per capita income), external debt stock was 125.2 percent for Kyrgyzstan and 59.7 percent for Tajikistan in 2016.
