Global experience in public debt reduction (on example of Sweden, Switzerland, and Iceland)

Abstract

Public debt reduction is one of the main objectives of budget policy formation in the current crisis conditions. In this regard, the study of the experience of different countries in this area is relevant. Therefore, the aim of the study was to provide recommendations for reducing the debt burden in the Kyrgyz Republic, based on the experience of other countries. The main methods used in the research were historical, comparison and generalisation. The study analysed the factors affecting the reduction of public debt in the Kyrgyz Republic. It was concluded that the components that can help affect the debt burden in the country are inflation, economic development, and a targeted policy of the state to pay debts. It was shown that in the current realities, countries that are successful in this direction most often use the latter approach. In addition, the situation in Sweden, Switzerland and Iceland was analysed directly and the main recommendations were given as to how the Kyrgyz Republic can improve its current situation in terms of debt reduction. These recommendations focused primarily on fighting corruption and improving the situation in the context of institutional development, as well as reducing expenditures to achieve a budget surplus. It was recommended not to increase taxes directly to increase state revenues, but to increase the efficiency of their collection. The data obtained from the results of the study can be used to formulate public policy in the area of public debt and budget management both in the Kyrgyz Republic and in other countries

Full text

ECONOMICS OF
DEVELOPMENT
Journal homepage: https://ecdev.com.ua/
Vol. 23, No. 1
2024
Suggested Citation:
Toktosunova, Ch., Isaev, M., Shatsheeva, N., Amanturova, Ch., & Chanachev, N. (2024). Global experience in public debt reduction (on
example of Sweden, Switzerland, and Iceland). Economics of Development, 23(1), 89-97. doi:10.57111/econ/1.2024.89.
*Corresponding author
UDC 336.27:330
Cholpon Toktosunova*
PhD in Economics, Associate Professor
M. Ryskulbekov Kyrgyz Economic University
720033, 58 Togolok Moldo Str., Bishkek, Kyrgyz Republic
https://orcid.org/0000-0001-6931-7880
Mars Isaev
First Vice-Mayor of Osh
M. Ryskulbekov Kyrgyz Economic University
720033, 58 Togolok Moldo Str., Bishkek, Kyrgyz Republic
https://orcid.org/0009-0003-4770-9527
Nurmira Shatsheeva
Senior Lecturer
M. Ryskulbekov Kyrgyz Economic University
720033, 58 Togolok Moldo Str., Bishkek, Kyrgyz Republic
https://orcid.org/0009-0001-2200-9765
Chinara Amanturova
PhD in Economics, Associate Professor
K. Tynystanov Issyk-Kul State University
722200, 103 Abdrahmanov Str., Karakol, Kyrgyz Republic
https://orcid.org/0009-0009-5909-5669
Nurlan Chanachev
Associate Professor
M. Ryskulbekov Kyrgyz Economic University
720033, 58 Togolok Moldo Str., Bishkek, Kyrgyz Republic
https://orcid.org/0009-0005-1948-1451
Global experience in public debt reduction
(on example of Sweden, Switzerland, and Iceland)
DOI: 10.57111/econ/1.2024.89
Article’s History: Received: 21.09.2023; Revised: 04.01.2024; Accepted: 22.03.2024
Abstract. Public debt reduction is one of the main objectives of budget policy formation in the current crisis
conditions. In this regard, the study of the experience of different countries in this area is relevant. Therefore, the aim of
the study was to provide recommendations for reducing the debt burden in the Kyrgyz Republic, based on the experience
of other countries. The main methods used in the research were historical, comparison and generalisation. The study
analysed the factors affecting the reduction of public debt in the Kyrgyz Republic. It was concluded that the components
that can help affect the debt burden in the country are ination, economic development, and a targeted policy of the
state to pay debts. It was shown that in the current realities, countries that are successful in this direction most often
use the latter approach. In addition, the situation in Sweden, Switzerland and Iceland was analysed directly and the
Copyright © The Author(s). This is an open access article distributed under the terms of the
Creative Commons Attribution License 4.0 (https://creativecommons.org/licenses/by/4.0/)

Global experience in public debt reduction...
90 Economics of Development. 2024. Vol. 23, No. 1
investors should be motivated to invest in instruments
other than debt, especially foreign direct investment.
This study uses the results of this analysis to create a
recommendation for the Kyrgyz Republic. This will form a
better policy for the country in the sphere, strengthening
its nancial sustainability, including in the face of global
crises. Ignoring this component in the management of the
state can lead to negative long-term consequences for the
country’s economy and its social component. Thus, the
study aimed to formulate recommendations on public pol-
icy in the context of public debt management based on an
assessment of the experience of other countries.
MATERIALS AND METHODS
The study analyses the level of public debt in the Kyrgyz
Republic and assesses the debt management policies of in-
dividual countries. In the current conditions of economic
development, most countries are characterised by trends
related to the growth of the ratio of public debt to gross do-
mestic product (GDP). In this connection, certain countries
to which such a trend is not relevant, and which remain
developed, were chosen, including: Switzerland, Sweden,
and Iceland. The period chosen for the study was 2006-
2022 due to the abundance of information to analyse for all
countries in this interval; it is also large enough to note the
main trends and draw conclusions based on them.
The study used various sources of information to
characterise the level of public debt in the countries. For
example, data from the Kyrgyz Republic was assessed
based on information from the National Statistical Com-
mittee of the Kyrgyz Republic (State debt, n.d.). Data
on the ratio of public debt to GDP for such countries as
Sweden, Switzerland and Iceland were analysed from of-
cial data of the website of the international organisation
World Bank (GDP (current US$)…, 2022; Ination, con-
sumer prices…,2022). Data from other sources were also
used to assess the situation in these countries: in particu-
lar, Sweden government budget decit(2022) to analyse
the nominal public debt and the ratio of budget decit to
GDP and Statista (Iceland: Ination rate…, 2023; Sweden:
Ination rate…,2023; Switzerland: Ination rate…,2023)
to assess the ination rate in the countries. The Coun-
tryeconomy website (General government gross debt,
2022) also made it possible to assess information about
the situation in terms of public debt in such countries as
Kazakhstan, Moldova, Uzbekistan, and Armenia, as states
that are similar to the Kyrgyz Republic in terms of their
development and are also members of a single interna-
tional organisation– Eurasian Economic Union (EEU). All
constructions and calculations in the study were carried
out in Microsoft Excel.
INTRODUCTION
Public debt is a set of nancial obligations of the state to its
creditors, which can be other countries, international or-
ganisations, private investors, and citizens. This indicator
arises as a result of borrowing to nance budget decits,
infrastructure projects or other public needs. By using var-
ious instruments, such as loans and securities (bonds), the
state can cover current budget needs at the expense of fu-
ture generations. In general, the competent use of such an
instrument may become a positive factor in long-term eco-
nomic development, although at the expense of a negative
impact on nancial stability. In modern conditions, when
after the time of economic abundance in the world the fac-
tors causing crisis events (such as COVID-19 virus and mil-
itary conicts) have become more evident, it becomes more
and more important to improve the nancial condition of
countries. Thus, analysing public debt policy is relevant.
Many scholars have worked on the assessment of the
nancial condition of the Kyrgyz Republic. D.Sharipova
& A. Kudebayeva (2023) analysed the nancial well-be-
ing of Kazakhstan and the Kyrgyz Republic between 2011
and 2018. They noted that the Kyrgyz Republic generally
experienced an improvement in well-being despite cri-
ses and economic and political instability. However, the
study remains rather limited as it only assessed data up to
2018. Financial sustainability in the Kyrgyz Republic has
also been studied by N.Alymkulova & J. Ganiev (2019),
but they focused on the formation of sound monetary
policy without studying problems in the context of state
budget formation and public debt servicing. A.A. Sher-
bekova & A.S.Ryspaeva(2021) studied the impact of the
COVID-19 crisis on the state of the nancial system of the
Kyrgyz Republic. They showed the negative trends in the
development of the country during this period and con-
cluded that monetary and scal policies during this period
should be aimed at mitigating the consequences. In par-
ticular, the importance of investing in economic recovery
was emphasised to sustain the country, restore condence
in markets and contain risks to nancial stability. E.Vi-
nokurovetal.(2022) assessed the resilience of the Kyrgyz
Republic’s debt to external shocks. Kyrgyz Republic was
shown to be more sensitive to a global recession than to a
nancial shock, indicating underdeveloped nancial mar-
kets and a continued dependence on commodity exports
and remittances. In this regard, the researchers pointed to
the importance of diversifying the economy for its stable
development but did not describe clear recommendations
for improving the situation in the country. The study of
the Kyrgyz Republic’s external debt was also conducted by
J.Ganievetal.(2020), point to its signicant recent growth.
The researchers concluded that the country is dependent
on foreign revenues, which led them to recommend that
main recommendations were given as to how the Kyrgyz Republic can improve its current situation in terms of debt
reduction. These recommendations focused primarily on ghting corruption and improving the situation in the context
of institutional development, as well as reducing expenditures to achieve a budget surplus. It was recommended not to
increase taxes directly to increase state revenues, but to increase the efciency of their collection. The data obtained
from the results of the study can be used to formulate public policy in the area of public debt and budget management
both in the Kyrgyz Republic and in other countries
Keywords: scal policy; ination; economic growth; budget; management

Ch. Toktosunova et al.
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Economics of Development. 2024. Vol. 23, No. 1
One of the main methods used in the study was the
historical one, which was used to assess the situation in
this context in retrospect, i.e. based on past data. The com-
parison was used to assess how the dynamics of public
debt differ in individual countries and to draw conclusions
about the reasons for changes in this indicator. The graph-
ical method was used to present the data in the form of
gures for easier evaluation. The generalisation method, in
turn, allowed us to discard all secondary data on the state
of public debt in the Kyrgyz Republic and other countries
to focus on the main information for concluding the study.
The description was used to collect the main data in the
study and then characterise them.
RESULTS
In general, only a few main reasons can be singled out, due
to which a decrease in the level of public debt in the coun-
try can be observed. These are direct debt repayment due
to an increase in revenues and decrease in budget expendi-
tures, growth of ination rate, which leads to deprecia-
tion of debt denominated in the respective currency, and
rapid economic growth, which increases the level of GDP,
and thus reduces the ratio of debt to this value (Butkuset
al.,2021). Thus, when assessing the trends related to the
reduction of public debt, it is worth assessing the causes
of this phenomenon as well. In modern conditions, it may
not be difcult to achieve a lower burden on the budget
by devaluing the national currency, but it may lead to oth-
er kinds of difculties in economic development together
with the discontent of citizens, and therefore, a possible
negative social consequences or even political ones can be
expected. Such an approach is undesirable and arises rath-
er as a consequence of other economic problems that the
state authorities have failed to solve. It is worth assessing
the situation in terms of the level of public debt of the Kyr-
gyz Republic (Fig.1).
Figure 1. Change in public debt in monetary terms and relation to GDP, 2006-2022
Source: compiled by the authors based on State debt (n.d.), Ination, consumer prices (annual %) – Kyrgyz Republic (2022)
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
0
100
200
300
400
500
600
2006 2007 2 008 2009 2010 2011 2012 20 13 2014 2015 2016 2017 2018 2019 2020 2021 2022
Public debt, billion soms Debt burden, % of GDP
As can be seen from Figure 1, the country’s public
debt in monetary terms (KGS billion) is growing, while
the burden per GDP is gradually decreasing. Thus, such
trends could be caused by one of two reasons: rising in-
ation rate or rapid growth of GDP. The relevant data is
shown in Figure2.
0
5
10
15
20
25
30
0
200
400
600
800
1,000
1,200
2006 2007 20 08 2009 2010 2011 2012 2013 2 014 2015 2016 2017 2018 20 19 2020 2021 2022
GDP, billion soms Inflation, % GDP with inflation, billion soms
Figure 2. Data characterising the level of GDP in Kyrgyz Republic
with and without ination in KGS and ination rate, 2006-2022
Source: compiled by the authors based on State debt (n.d.), Ination, consumer prices (annual %) – Kyrgyz Republic (2022)
As can be seen from Figure2, the level of GDP in nom-
inal terms in the Kyrgyz Republic increased signicantly:
by 816%. Nevertheless, in real terms, the change was 174%,
which also remains signicant. At the same time, the growth
in the level of public debt in the country was 73.68% over
the selected period. Thus, it is possible to conclude that the
reason for the reduction of public debt in the country was
high ination (which cumulatively for the selected period
was at the level of 224%), as well as rapid growth of GDP (by
174% including ination), but not debt repayments by the
state. Although ination was at sane levels from 2012 to
2019, it increased signicantly in 2020 and 2021 due to the
onset of the COVID-19 pandemic and continued to rise in
2022 due to the onset of the Russian invasion of Ukraine
and the negative effects it brought to the economic de-
velopment of the Kyrgyz Republic (negative impact of

Global experience in public debt reduction...
92 Economics of Development. 2024. Vol. 23, No. 1
sanctions, complication of trade interactions, deteriora-
tion of the investment climate). It has been noted above
that in the long term such trends may hurt the economic
well-being of the country as a whole and its citizens in
particular (Samuset al.,2023). In this regard, the politi-
cal authorities of the Kyrgyz Republic should change their
approach to scal and monetary policy, directing more ef-
forts to ght ination. It is also worth evaluating data that
would characterise the situation concerning public debt
dynamics in countries similar in their characteristics and
development features to the Kyrgyz Republic. Such data
are shown in Figure3.
Figure 3. Data on dynamics of public debt-to-GDP ratio in Kazakhstan, Moldova, Uzbekistan, and Armenia, 2006-2022, %
Source: compiled by the author based on General government gross debt (2022)
As can be seen from Figure 3, most of the selected
countries have an upward trend in the level of public debt.
In particular, such a trend has been observed since 2008,
which is associated with the global nancial crisis. It is also
worth noting that although the level of debt to GDP ratio
in these countries is still small, such trends may lead to
negative consequences in the long run. Considering the sta-
tistics of public debt of most countries, it shows an upward
trend, including concerning GDP. This also applies to devel-
oped countries. One of the examples of the reverse situation
are such countries as Sweden, Switzerland, and Iceland. The
level of their public debt to GDP can be seen in Figure 4.
Figure 4. Data on public debt levels in Sweden, Switzerland, and Iceland, 2006-2022
Source: compiled by the author based on GDP (current US$) – Sweden, Switzerland, Iceland (2022)
As can be seen from Figure4, the level of public
debt in these countries is gradually decreasing. To
understand why this is the case, it is worth analysing
inflation, economic growth, and budget deficit in the
same way. The situation in Sweden was analysed, which
can be seen in Figure5.
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Kazakhstan Moldova Uzbekistan Armenia
Figure 5. Data on ination, GDP, public debt, and budget decit in Sweden, 2006-2022
Source: compiled by the author based on Sweden government budget decit (2022), Sweden: Ination rate from 1988 to
2028 (2023)
0
20
40
60
80
100
120
140
160
180
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Sweden debt to GDP, % Iceland debt to GDP, % Switzerland debt to GDP, %
-4
-2
0
2
4
6
8
10
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Sweden government debt, mln dol
Inflation Sweden, %
Sweden GPD, bln dol
Sweden budget deficit, % to GDP

Ch. Toktosunova et al.
93
Economics of Development. 2024. Vol. 23, No. 1
As can be seen from Figure5, the overall reduction
in the level of debt burden in the country simultaneously
accompanied the growth of GDP (by almost 40%); and
overall growth in the level of public debt, but by the time
of 2022 it was already at the level of the beginning of the
period under consideration, i.e. it did not change even
in nominal terms; low inflation (at the levelof up to 4%
until 2022) and different indicators of the budget deficit,
which, depending on the year, could turn out to be both
positive and negative.
All this indicates that the reduction in the level of
public debt to GDP in the country was caused by an ap-
propriate budget policy. The data on the situation in Swit-
zerland are also worth considering (Fig.6).
-3,5
-3
-2,5
-2
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
3
200
250
300
350
400
450
500
550
600
650
700
750
800
850
2006 2007 20 08 2009 2010 2011 2012 2013 2 014 2015 2016 2017 2018 20 19 2020 2021 2022
Switzerland GPD, bln dol
Inflation Switzerland, %
Switzerland government debt, bln dol
Switzerland budget deficit, % to GDP
Figure 6. Data on ination, GDP, public debt, and budget decit in Switzerland, 2006-2022
Source: compiled by the author based on Switzerland: Ination rate from 1988 to 2028 (2023)
As can be seen in Figure6, Switzerland has experienced
strong GDP growth, low ination (deation in some years),
and mostly positive budget decits. Nevertheless, public
debt ratios increased over time, but at a lower rate than GDP
(until 2020, when the increase was triggered by the start of
the COVID-19 crisis and subsequently by the start of the
Russian full-scale invasion of Ukraine).This indicates that
the reason for such trends was both the appropriate scal
policy and the country’s signicant economic growth rates.
Similar data are worth considering for Iceland (Fig. 7).
Figure 7. Data on ination, GDP, public debt, and budget decit in Iceland, 2006-2022
Source: compiled by the author based on Iceland: Ination rate from 1988 to 2028 (2023)
-13
-8
-3
2
7
12
0
5
10
15
20
25
30
2006 2007 20 08 2009 2010 2011 2012 2013 2 014 2015 2016 2017 2018 2019 2020 2021 2022
Iceland GPD, bln dol
Inflation Iceland, %
Iceland government debt, bln dol
Iceland budget Ddeficit, % to GDP
In general, the decline in the level of public debt to
GDP in Iceland started after 2011. As can be seen from Fig-
ure 7, this period of the country’s functioning is marked
by some key indicators: signicant GDP growth; relative-
ly low ination; a near-zero budget decit and in 2016 a
large surplus (negative values started to emerge from 2020
onwards due to the onset of the COVID-19 crisis); and a
decline in the nominal level of public debt. This indicates
that the country pursued a strategy of deleveraging directly
through loan repayments.
Thus, if a government aims to reduce its debt load, it
should do so primarily by reducing public debt directly,
rather than through any of the other instruments described
in the study. While each situation may be unique, there are
still consistent and similar principles to each approach.
Thus, the priority to ensure the possibility of debt repay-
ment is a budget surplus or near-zero decit, because only
in case of more inows than outows can the state allo-
cate part of the funds to repay the debt. This, in turn, can
be achieved either by reducing expenditures or increasing

Global experience in public debt reduction...
94 Economics of Development. 2024. Vol. 23, No. 1
revenues. Considering the revenue side, it is worth paying
attention to the tax component and updating the existing
policy in this area. This does not necessarily mean increas-
ing the tax burden on citizens or businesses: revenue can
be increased by ensuring that collection efciency is in-
creased and that businesses come out of the shadows. This
also applies to customs, optimising procedures to combat
smuggling. Increasing collections is also generally an ef-
fective policy, but there are several nuances to it.
The question of how businesses and the population
react to it remains, as such steps are often not approved,
which can lead to all sorts of consequences. It also increas-
es the likelihood of increase in the shadow economy, in-
creasing the share of enterprises that will try to avoid taxes.
To combat the latter, there are appropriate mechanisms, in
particular, the introduction of digital technologies and au-
tomation of the processes of collecting information and di-
rect payments from entrepreneurs. Nevertheless, they are
not yet widespread enough within government structures
to eliminate such activities (or in any signicant way). It
is also worth noting that taxes primarily arise from income
generation by businesses, especially exporters, and there-
fore activities aimed at supporting them are also effective.
Another possibility to achieve a budget surplus is to
reduce expenditures. Since the reduction of social benets
is also often an unpopular policy on the part of citizens
(moreover, it should be indexed every year, ideally by a level
above ination), the only way out is to reduce the state ap-
paratus as much as possible. State actions should be aimed
at optimising internal processes, allowing to reduce unnec-
essary expenditures, including in the context of projects
managed by the government (Assoum & Alinsato, 2023;
Dimnwobiet al.,2023). Fighting corruption is also effective:
since it is most often caused by excessive cost overruns in
the implementation of projects, countering it can either re-
duce budget expenditures or increase the efciency of the
implemented projects. Both of these outcomes remain ac-
ceptable. Finally, it is worth noting that to reduce the debt
burden, it may also be important to discuss with creditors
what options remain for restructuring it. For example, if
the state authorities manage to achieve lower interest rates
or lengthen the debt repayment period, its instant redemp-
tion, this may make the task of debt repayment much easier.
DISCUSSION
In general, it remains acceptable for the Kyrgyz Republic to
implement any of the above recommendations. Neverthe-
less, given the difculties in the country caused by a rather
high level of corruption, it is more effective to reduce costs
in the country by ensuring more effective management of
civil servants’ activities. This can be achieved primarily
through the introduction of new technologies, reduction of
the role of the state, automation of many processes, staff
reduction. Special attention should be paid to the role of the
state. Countries with a low level of corruption often have a
rather high level of state involvement in the management
of economic processes, which may be paradoxical in some
ways. The absence (or low inuence) of this negative com-
ponent is due to well-developed institutions and a suitable
legal framework, which is also worth paying attention to in
the ght against corruption (Baklouti & Boujelbene,2022).
Nevertheless, reducing the role of the state in economic
processes may help to combat this component by making it
more difcult for the authorities to act in violation of state
laws: however, it should be realised that such practices may
only have a temporary effect. In turn, an increase in the tax
burden can only lead to a worsening of the situation in this
direction. In addition, it is worth considering the possibil-
ities of debt restructuring. It is also worth understanding
that such a policy in the country should be based on the
real capabilities of the country in the context of how it can
withstand the existing crises related to the consequences of
the COVID-19 crisis and the complex geopolitical situation
in the region (Elberryet al.,2023). In any case, their policy
should become such sooner or later if the country’s goal
is to ensure quality long-term sustainable development.
I.Hussainet al.(2022) and A.Aspide et al.(2022) an-
alysed the impact of scal adjustments on public debt re-
duction. Their analysis showed that there is a clear rela-
tionship between public nance objectives and economic
growth and that changes made in scal policy are more
effective in stimulating economic growth but not neces-
sarily for scal sustainability. In addition, they concluded
that variables such as GDP growth as well as changes in
the political sphere (elections and changes in government)
signicantly affect the change in the debt level cut-off. The
study on public debt in the Kyrgyz Republic also concluded
that the economic development of the country plays a sig-
nicant role in this context. Nevertheless, it is difcult to
agree with the conclusion that nancial stability and eco-
nomic growth should be achieved by different instruments
of public policy. Thus, if nancial stability is lacking, the
ow of investment, especially foreign direct investment,
may be signicantly reduced, which in turn will lead to low-
er economic growth, and there are many examples of this
(Heimberger,2021; Trusova,2022). Such assessments re-
quire additional analysis to form full-edged conclusions.
The determinants of public debt reduction in Central
and Eastern European countries were assessed by S.Semik
& L.Zimmermann(2022). The results of the study showed
that in this context the main factors are the importance of
scal policy framework, economic growth, and the interest
burden of the government to achieve a signicant debt re-
duction. It is noteworthy that scal adjustments are most
successful when they focus on reducing government ex-
penditure, especially by reducing public employee compen-
sation and social benet payments. The study emphasises
the positive impact of high real GDP growth rates on the
likelihood of signicant public debt reduction, highlighting
the need for structural reforms to increase the pace of eco-
nomic development of countries. The researchers also not-
ed the correlation between changes in interest rates on debt
service and its size. Thus, they noted that the higher the
interest rates are, the more the public debt will be reduced
due to the desire to reduce the growth of costs associated
with its servicing. In general, the scientists’ conclusions are
conrmed by the assessments made within the framework
of the study of the debt burden situation in the Kyrgyz Re-
public. Although economic development does have a pos-
itive impact on improving the situation with the level of
liabilities in the country, however, to achieve qualitative re-
sults it is worthwhile to pursue a targeted policy in this area.
The interaction between public debt and econo-
mic growth was assessed by Z. Liu & J. Lyu (2020) and

Ch. Toktosunova et al.
95
Economics of Development. 2024. Vol. 23, No. 1
S.K.Hilton(2021). The scholars noted that high scal dis-
cipline is crucial for the use of borrowed funds with a focus
on priority projects, preferably infrastructure or invest-
ment projects. Such activities have a positive impact on the
economic development of a country in the long run. There-
fore, governments are advised not to expect immediate
economic improvement in the short term due to effective
debt management, but in the long term, a signicant posi-
tive effect is expected from these activities. It is also worth
being prepared for an increase in ination in the short term
along with an increase in debt levels with expectations of
likely changes in the long term. The study on debt burden
in the Kyrgyz Republic also concluded that one of the main
components that should allow the country to achieve a re-
duction in the level of budgetary burden should be a direct-
ed policy for the payment of liabilities (which is scal dis-
cipline). It was shown that this is the only way to achieve a
sufciently high level of long-term economic development,
which is in line with the conclusions of the study above.
The relationship between public debt and economic
development has been studied by S.H.Lawet al. (2021). Us-
ing data from 1984 to 2015, the researchers showed that
there is a non-linear relationship between public debt and
economic growth. The results emphasise the importance
of institutions in inuencing the relationship between
public debt and economic growth, with better institutions
mitigating the negative impact of high public debt on eco-
nomic growth. In this regard, understanding the levels at
which scal policy should operate to avoid excessive debt
accumulation remains an important component (Broneret
al.,2022). The study on the debt burden situation in the
Kyrgyz Republic also concluded on the role of institutions
in achieving the goals of reducing the level of liabilities in
the country. Based on selected developed countries, it was
also shown that only through appropriate public policies
aimed at debt repayment can sustainable nancial devel-
opment be achieved in the long term.
As part of their study, S.Bernardini et al. (2019) studied
the experience of public debt reduction using data from the
last 70 years. The analysis showed that there were about 30
recent cases where the ratio of public debt to GDP fell by
more than 25%. At such times, countries were more likely to
have had high ination and growth rates, scal tightening,
signicant levels of economic development, debt restruc-
turing, or standard methods of adjustment through spend-
ing cuts and tax increases (but this became more common
after 1980). Some past practices, such as debt repayment
through sudden ination, are too impractical in the current
realities, while the method related to cost reduction and tax
increases can be considered more than viable. In the case of
restructuring, although necessary in some cases, it cannot
be used as a holistic method but must be supported by an-
other methodology (i.e. cost reduction and tax increases).
The study on the public debt situation in the Kyrgyz Re-
public also concluded that in the current environment, it is
possible to achieve qualitative results in the long term only
through the implementation of appropriate policies. At the
same time, the country in recent years has also seen a trend
towards a generally lower debt burden, but it was caused
more by ination and a relatively high level of economic
development, which cannot be a sustainable model for the
future. Scientists’ estimates based on data for the last 70
years only conrm this concept.
CONCLUSIONS
Thus, the study identied three main factors that can lead
to the reduction of public debt in countries: direct repay-
ment of debt by increasing revenues and reducing budget
expenditures; reduction of its real value due to high ina-
tion (debt depreciation); signicant economic growth and
increase in the level of gross domestic output. The study
concluded that in modern realities, the states that have
achieved improvements in terms of the state of public debt
have used instruments aimed at direct payment. Although
there are still opportunities to reduce its impact through
economic growth and ination problems, this is less ef-
fective and applicable, given the likely negative short- and
long-term consequences of such policies.
The study analysed the situation in terms of public
debt of the Kyrgyz Republic: it was shown that generally
positive dynamics are characterised by a reduction in the
burden, but it was concluded that it was caused primarily
by high ination and signicant growth rates. When ana-
lysing the EEU member countries, it was shown that they
are generally characterised by trends that are more likely to
increase the ratio of public debt to gross domestic product.
To describe the necessary reforms for the Kyrgyz Republic,
the dynamics in Sweden, Switzerland and Iceland were as-
sessed, which also managed to achieve an improvement in
the situation with public debt, but without high ination.
Based on this, conclusions were drawn as to what public
policy should be in terms of debt management in the Kyr-
gyz Republic. In particular, it was concluded that there is a
need to actively ght corruption and improve institutions
in principle. Particular attention was paid to ensuring the
effectiveness of public sector management. It remains rel-
evant for future research to nd other methods to improve
the macroeconomic situation in the Kyrgyz Republic, in
particular, to ght ination, given the crisis in the world
and the region.
ACKNOWLEDGEMENTS
None.
CONFLICT OF INTEREST
None.
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97
Economics of Development. 2024. Vol. 23, No. 1
Чолпон Турсуналієвна Токтосунова
Кандидат економічних наук, доцент
Киргизький економічний університет імені Муси Рискулбекова
720033, вул. Тоголок Молдо, 58, м. Бішкек, Киргизька Республіка
https://orcid.org/0000-0001-6931-7880
Марс Асанович Ісаєв
Перший віце-мер м. Ош
Киргизький економічний університет імені Муси Рискулбекова
720033, вул. Тоголок Молдо, 58, м. Бішкек, Киргизька Республіка
https://orcid.org/0009-0003-4770-9527
Нурміра Канибеківна Шатшеєва
Старший викладач
Киргизький економічний університет імені Муси Рискулбекова
720033, вул. Тоголок Молдо, 58, м. Бішкек, Киргизька Республіка
https://orcid.org/0009-0001-2200-9765
Чинара Кидикбеківна Амантурова
Кандидат економічних наук, доцент
Іссик-Кульський державний університет імені К. Тинистанова
722200, вул. Абдрахманова, 103, м. Каракол, Киргизька Республіка
https://orcid.org/0009-0009-5909-5669
Нурлан Сидикович Чаначев
Доцент
Киргизький економічний університет імені Муси Рискулбекова
720033, вул. Тоголок Молдо, 58, м. Бішкек, Киргизька Республіка
https://orcid.org/0009-0005-1948-1451
Світовий досвід скорочення державного боргу
(на прикладі Швеції, Швейцарії та Ісландії)
Анотація. Скорочення державного боргу є одним з основних завдань формування бюджетної політики в
сучасних кризових умовах. У зв’язку з цим вивчення досвіду різних країн у цій сфері є актуальним. Тому метою
дослідження було надання рекомендацій щодо зниження боргового навантаження в Киргизькій Республіці на
основі досвіду інших країн. Основними методами дослідження були історичний, порівняння та узагальнення.
У дослідженні було проаналізовано фактори, що впливають на скорочення державного боргу в Киргизькій
Республіці. Було зроблено висновок, що складовими, які можуть допомогти вплинути на боргове навантаження
в країні, є інфляція, економічний розвиток та цілеспрямована політика держави щодо виплати боргів. Було
показано, що в сучасних реаліях країни, які є успішними в цьому напрямку, найчастіше використовують останній
підхід. Крім того, було безпосередньо проаналізовано ситуацію у Швеції, Швейцарії та Ісландії та надано основні
рекомендації щодо того, як Киргизька Республіка може покращити свою поточну ситуацію в плані скорочення
боргу. Ці рекомендації були зосереджені насамперед на боротьбі з корупцією та покращенні ситуації в контексті
інституційного розвитку, а також на скороченні видатків для досягнення профіциту бюджету. Було рекомендовано
не збільшувати податки безпосередньо для збільшення державних доходів, а підвищувати ефективність їх збору.
Отримані за результатами дослідження дані можуть бути використані для формування державної політики у
сфері управління державним боргом та бюджетом як у Киргизькій Республіці, так і в інших країнах
Ключові слова: фіскальна політика; інфляція; економічне зростання; бюджет; управління