EFSD and CAREC Institute discuss debt and financial sustainability in Central Asia and the Caucasus

EFSD and CAREC Institute discuss debt and financial sustainability in Central Asia and the Caucasus

Astana, 15 May 2025. The Eurasian Fund for Stabilization and Development (EFSD) and the CAREC Institute held a joint webinar on debt and financial sustainability in Central Asia and the Caucasus.

EFSD experts and the CAREC Institute presented the results of a study assessing interest rate risks in the debt portfolios of the region’s states. Particular attention is paid to the effect that floating-rate government obligations have on debt and fiscal sustainability.

The study observes that the level of interest rate risk in the countries under review remains within limits that ensure the sustainability of public debt. However, most states in the region could optimise their debt servicing costs and reduce the risks to debt sustainability by issuing domestic floating-rate and inflation-indexed obligations.

During the webinar, EFSD analysts presented an innovative methodology to assess the potential impact of natural disasters on states’ debt sustainability. Geographical, climatic, and other factors that could increase debt risks are analysed using the examples of Armenia, Kyrgyzstan, and Tajikistan. This approach enables an assessment of the impact of natural disasters on states’ key macroeconomic and debt indicators and facilitates the development of preventive measures to minimise financial losses.

Participants stressed that it would be crucial to share expertise and coordinate efforts between countries and international institutions in order to bolster the region’s financial sustainability.

“At this pivotal moment in our global economic landscape, it is imperative that we prioritise collaboration and innovation in our approach to financial sustainability. By aligning our debt management strategies with the Sustainable Development Goals, we can not only address immediate fiscal challenges but also lay the groundwork for long-term economic resilience. Together, we can create a future where financial stability and sustainable growth go hand in hand,” emphasised Kuat Akizhanov, Deputy Director Two, CAREC Institute.

Sergei Ulatov, Chief Economist of the EFSD, noted that exchanging knowledge and working jointly with partners help develop recommendations that promote economic stability and sustainable development in Central Asia and the Caucasus.

The event took place on 13 May 2025. The webinar was attended by representatives of the Asian Development Bank, the World Bank, and the International Monetary Fund.

The Eurasian Fund for Stabilization and Development (EFSD) is a regional financing arrangement totalling over US $9 billion, established in 2009 by the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan. The EFSD aims to promote economic and financial stability in its member states and support their sustainable development.

The Central Asia Regional Economic Cooperation (CAREC) Institute is an intergovernmental organisation dedicated to promoting economic cooperation in Central Asia and along the Silk Road through knowledge generation and sharing. The CAREC Institute is jointly shared, owned, and governed by eleven member countries. The Institute acts as a knowledge connector among the five CAREC themes − economic and financial stability; trade, tourism, and economic corridors; infrastructure and economic connectivity; agriculture and water; human development – to ensure coherence in design and implementation of policies, programmes, and projects to promote regional economic cooperation and integration.