Kyrgyzstan on verge of default

Kyrgyzstan faces a default risk and may spiral into hyperinflation due to the Central Asian republic's outsized budget deficit, a top finance official warned Thursday. "In 2011, Kyrgyzstan may find itself on the verge of a default," the Kyrgyz finance ministry's supervisory board member Azamat Akeleyev told a parliamentary hearing.
The country, which in 2010 saw the ousting of its president and ethnic rioting that left hundreds dead, adopted a new budget this month that expands social spending to deal with the consequences of last year's unrest. Akeleyev said the 2011 spending plan will leave the country with a deficit of 21 billion soms ($450 million, 320 million euros,) or nine percent of its gross domestic product. The government's plans to raise taxes to cover the revenue shortfalls were also making economists and investors nervous, Akeleyev said.