Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

CIS's Poor In Line for Debt Relief

LONDON -- Some of the poorest countries of the Commonwealth of Independent States could see their debts cut by up to two-thirds and be given more grants and loans in exchange for economic reforms under proposals that lenders will consider this week.

Armenia, Georgia, Kyrgyzstan, Moldova and Tajikistan, which have $4.3 billion in debts, could join the Heavily Indebted Poor Countries debt scheme, according to proposals from the World Bank and International Monetary Fund to be discussed in London.

Without debt relief, economic reform and more grants and loans, these countries will not have enough to spend on basic healthcare and education, said a report for the meeting.

"The impact of the debt on the budget remains a matter of concern in all countries except possibly Armenia, and some debt flow rescheduling may be required if social expenditures are not to be squeezed," said the IMF/World Bank report.

Of seven countries to be discussed at meetings between creditor countries and the bank and fund, Armenia, Georgia and Kyrgyzstan have debts in net present value terms in excess of 150 percent of exports, an economically unsustainable level. For Georgia, Kyrgyzstan, Moldova and Tajikistan, the level of external debt to government revenues is in excess of a crippling 250 percent, while for Armenia it is 168 percent. The other two countries to be discussed are oil-rich Azerbaijan and Turkmenistan, which border Afghanistan.

"One of the fallouts of 9/11 [terror attacks] is that there is a new willingness to look at this region," said a spokesman for the World Bank.

Any meaningful debt reductions will have to secure the agreement of the Russians, who account for 14 percent of the $4.3 billion of government and government-guaranteed debt owed by Armenia, Georgia, Kyrgyzstan, Moldova and Tajikistan.

"It is vital for any package put together to involve Russia," said a European official involved in the talks.

Discussions could include reductions in Russia's debt to the Paris Club of sovereign creditors.