Sobir Kurbanov and Vlad Paddack
Central Asia is entering a period of heightened fiscal vulnerability as public debt continues to rise across much of the region. The World Bank’s latest International Debt Report (IDR) underscored that rapid debt accumulation is not inherently problematic if borrowing is channeled into productive investment. However, when returns are weak, creditor exposure is concentrated, and transparency is limited, debt dynamics can quickly become destabilizing. These risks are increasingly evident in Central Asia, where amortization pressures are growing, fiscal buffers remain thin, and revenue bases are narrow.
The IDR emphasized the need for clearer borrowing strategies, stronger project selection, improved debt transparency, and systematic assessment of long-term fiscal risks before governments commit to new external loans. It also stressed that public investment should prioritize sectors with strong economic payoffs, such as export-oriented industries, energy efficiency, agriculture modernization, and digitalization, while limiting politically motivated or low-yield infrastructure projects. These recommendations are particularly relevant for Central Asian economies now facing rising debt-service obligations.
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