2 Debt Accumulation in the CIS-7 Countries: Bad Luck, Bad Policies, or Bad Advice?

Abstract

With the exception of Azerbaijan, which is a net energy exporter, the other low-income CIS countries—Armenia, Georgia, the Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan—face serious external debt problems.1 From a situation of virtually no debt in 1992, a meteoric increase in debt levels occurred thereafter. In particular, multilateral (IMF and World Bank) lending contributed to the high and increasingly unsustainable levels of debt, despite close monitoring by these institutions undertaken through their conditionality. The CIS-7 experience contrasts with that of other transition economies, which have managed the transition without similar debt accumulation, and is more akin to that of the poorer, highly indebted countries that are heavily reliant on official credit.2

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