TOPIC OF THE WEEK: CCA public external debt service appears (mostly) manageable over 2025-26

CAUCASUS / CENTRAL ASIA - Report 25 Apr 2025 by Ivan Tchakarov

I continue exploring the external side of the CCA economies as the more challenging global backdrop in the wake of Trump's tariffs may add to the already worsening CA dynamics that I discussed earlier in Apr. In this report I examine the public external debt profile and debt service for 2025 and 2026, which indicates a general increase in external obligations over the next two years.

I assess the ability to meet these public external debt obligations this year and next using various financial measures, including their share relative to FX reserves, fiscal revenues, and exports of goods and services. These metrics suggest that Armenia and Georgia appear more vulnerable to macroeconomic shocks, while Kyrgyzstan appears less exposed to risks.

Uzbekistan presents a very interesting case. While many of the financial ratios we examine look worse than those of peers, the country has also benefited the most in the CCA pack (and by a large amount) from the steady increase in gold prices in the last couple of years. It has accumulated record-high FX reserves, which has also created a very robust FX buffer to lean on as external obligations come due.

Tajikistan's case is also intriguing, because while it will see increasing debt service starting from this year and related to the 2027 Eurobond, it has also boasted an impressive five-year-long run of CA surpluses, which has usefully amplified its FX reserves. Overall, Tajikistan currently appears to be in the middle of the pack with respect to its ability to repay upcoming external obligations, better positioned than Armenia and Georgia, but worse than Uzbekistan and Kyrgyzstan.

Now read on...

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