Kyrgyzstan Helps Dollar-Battered Debtors, But There’s a Catch
Kyrgyzstan’s government is coming to the assistance of debtors battered by the U.S. greenback’s rise against the local currency, but it is unclear how useful, widespread or sustainable a new som-for-dollar debt scheme will be.
Nearly 3,000 people that took out large loans in dollars for housing in the first half of 2015 were left unable to make payments as the som plummeted by over one-fifth against the dollar in the last six months of the year, largely on the back of economic peril in Russia.
A government initiative presented on February 1 allows those people to exchange their outstanding dollar debt for Kyrgyz soms at a favorable rate of 62.144 soms — a rate from July 1, 2015, before the dollar began its climb towards the roughly 76 soms it costs now.
The government has put aside over $7.5 million to plug the gap between the exchange rate of yore and the current one and is only intervening in loans worth $40,000 or less.
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