Page 26 - Small Stans Outlook 2023

Without fiscal consolidation, public debt will rise gradually from 58% of
GDP in 2022 to 61% of GDP by 2027, the Fund also said.

It further observed: “The authorities’ exceptional tax administration
efforts substantially improved revenue collection in 2022, but
expenditure has increased much more due to the significant increase
during the year in public wages, pensions and public investment. From
2023 onwards the full year impact of the wage and pension increases is
likely to keep the deficit elevated despite the planned reduction in
domestically financed investment spending. The latter could undermine
growth in view of the large infrastructure investment needs.

“At the same time, given limited foreign financing, raising around 4% of
GDP per year in a shallow domestic bond market to close the fiscal
deficit could be a significant challenge and costly.”

Without additional fiscal space and concessional financing, large new
infrastructure projects such as the China–Kyrgyzstan–Uzbekistan (CKU)
railway and Kambarata-1 hydropower plant would further increase
public debt, the Fund said.

“Further, since the Kumtor gold mine is now fully state-owned, it should
comply with the same tax regime as other gold mines, while channeling
its dividends to the budget would provide much-needed fiscal resources.
A tax amnesty or new preferential tax regimes could result in additional
revenue loss,” it added.

26 Small Stans 2023 www.intellinews.com