Cash Management Reforms and

Government Securities Market

Development in the Kyrgyz Republic

Almazbek Azimov
Public Debt and Assets Department
Ministry of Finance of the Kyrgyz Republic

Second Asian Regional Public Debt Management Forum

Phuket, Thailand, 16-18 March 2011
 Budget execution
arrangements prior to 1994
Systems inherited from former Soviet Union:
• Limited Treasury services by the MoF and CB;
• Government payment system
– More then 5 thousands bank accounts;
• No in-year fiscal reports except from CB
– Revenues and aggregate transfers to line ministries;
• Unreliable and much delayed annual financial reports;
• Non transparent process of public expenditures;
• System did not promote tracking of expenditure arrears, cash
planning, and reconciliation of accounts with bank balances.

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Establishing Treasury in 1994:
Retrospective
Factors contributed to successful installation of a Treasury:
• Political commitment to reform initiatives;
• MoF willingness to effect fundamental systematic
changes;
• Technical assistance in development of the Treasury;
• Introduction of a new government payment system;
• Centralization of cash balances and monitoring of
transactions:
– Establishing a Treasury Single Account.

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Cash Management Reforms (1):

Legal Framework Reforms:

• Treasury Law, 1994;
• Public and Non-public Debt Law, 2001;
• Public Debt Management Strategy, 2001 and
2009;
Institutional Reforms:
• Treasury system with 62 regional treasury
offices.

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Cash Management Reforms (2):

• Unification of cash resources of central and

local governments into a Treasury Single
Account.
• Centralized payment service for all central and
local government budget institutions;
• All central and subnational revenues pass
through the Treasury;
• Budgetary and extrabudgetary expenditures of
budget institutions pass through the Treasury.
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 Cash Management Reforms:
Coordination between MoF, CB
MoF Committee for Financial Planning:
• Aggregate control of spending;
• Efficient implementation of the budget;
• Minimization of the cost of government
borrowing.
Mof and CB Council for Coordination:
• Fiscal and monetary policies coordination.

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Public debt of KR as of end 2010
Public debt – 2 793.2 mln. USD (62.0% of GDP)

• External debt – 2 615.7 mln. USD (58.1% of

GDP)
– Bilateral – 1 148.9 mln. USD
– Multilateral – 1 465.2 mln. USD
– Guarantees – 1.6 mln. USD

• Domestic debt – 177.5 mln. USD (3.9% of GDP)

– Marketable – 100.4 mln. USD
– Non marketable – 77.1 mln. USD
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 Public domestic debt
as of end 2010
• Public domestic debt – 8 361.4 million som:
• Treasury bills (3, 6, 12 months) – 2 841.3 million
som
• Treasury bonds (2 year) – 1 888.4 million som
• Treasury obligations (NBKR) – 2 931.5 million
som
• Bill of exchange – 35.2 million som
• Indexation of citizens’ savings – 664.9 million
som

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 Government securities:
key functions and goals
• National budget deficit financing;
• Refinancing of maturing public debt;
• Development of the government securities
market, and financial market in general;
• Well functioning government securities
market increases the efficiency of monetary
policy implementation.

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 Government securities:
key characteristics
• Short-term government securities :
• Treasury bills
• Long-term government securities:
• Treasury bonds;
• Treasury obligations;
• Other government securities.
• Other domestic public debt-related
liabilities of the Kyrgyz Government.

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Dynamics of T-bill sales (mln. som)

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 Government Securities Market
Development: Results

• Enactment of the KR Public Debt Management Strategy for 2009-

2011, 2009;
• Enactment of the Regulation on Issuance, Placement, Circulation
and Redemption of Government Securities in the KR, 2008;
• Cancellation of Treasury bills of 18 and 24-month maturity;
• Issuance of Treasury bonds , 2-year maturity, fixed coupon rate
(October, 2009);
• Assigning new registration numbers to government securities and
the NBKR notes:
• Example: GD013101108, GBA02120118 contains information
about issuer (NBKR or government), type (bill or bond), tenor
and redemption date.

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Government Securities Market
Development: Results
• Revision of the Issuance Calendar for government
securities (regular publication; reduction in the
number of auctions; increase in the volume of
offered government securities);
• The debt of the KR Government to the NBKR has
been settled;
• Development of weekly report on Treasury bills;
• Initiating development of a data base for the
domestic debt of the KR.

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 Government securities market
development prospects
• Improvements in the legislation regulating government
securities market;
• Targeting at clear implementation of the Issuance Calendar
taking into account the budget financing needs;
• Development of a regular dialogue among the issuer, agent,
professional participants and final investors;
• Broadening of Implementing measures aiming at improving
secondary market liquidity;
• Issuance of longer-term government securities;
• Public awareness campaign with regard to the government
securities market.

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 Government securities market
development prospects

• Introduction of reopening and buy-back practices for

government securities;
• Extension of the range of participants in the government
securities markets through improvement of their attractiveness;
• Consideration of alternative placement mechanisms for
government securities (through a stock exchange);
• Recommencement of retail sale of government securities
through the NBKR network;
• Completion of the data base development for the domestic
debt (dDTS).

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Thank you for your attention!

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