Central Asia Debt Crisis 2025: World Bank Warns of Rising Fiscal Risks

The bridges are built, but the bills are due. Central Asia is entering a period of heightened fiscal vulnerability as public debt continues to rise across the region. The World Bank’s latest International Debt Report (IDR) underscores that rapid debt accumulation is becoming destabilizing as returns on investment remain weak and transparency is limited.

Central Asia Debt Crisis 2025: The Red Zone in Kyrgyzstan and Tajikistan

Kyrgyzstan and Tajikistan are at the forefront of this fiscal storm. In Kyrgyzstan, external public debt has climbed to 55-60% of GDP. Debt service already absorbs 18-22% of government revenues, crossing the critical 15-20% threshold where development spending typically gets sacrificed for repayment.

Similarly, Tajikistan owes more than half of its external debt to China. With debt service consuming one-fifth of fiscal revenues, the country faces immense pressure from high commercial interest rates on projects like the Rogun hydropower plant, especially as global interest rates remain elevated.

Uzbekistan’s Borrowing Surge and Hidden Liabilities

Uzbekistan has seen its debt skyrocket from 8% to roughly 36-40% of GDP since 2017. While this supports modernization, the end of grace periods in the late 2020s will trigger sharp increases in payments. Meanwhile, Kazakhstan maintains a moderate ratio below 25%, but substantial liabilities within state-owned enterprises pose a 'shadow' risk that could translate into fiscal stress during commodity downturns.