BISHKEK (Reuters) - Kyrgyzstan's government offered on Wednesday a novel idea to repay the impoverished nation's giant foreign debt -- simply to club together and pay it off.

The Central Asian state's government rejected in February the Heavily Indebted Poor Countries initiative of the International Monetary Fund and the World Bank, which would have slashed its $2 billion (1 billion pound) foreign debt in half in return for reforms.

President Kurmanbek Bakiyev said at the time that by signing to the foreign-prescribed initiative, the Kyrgyz risked losing face and would better tighten their belts to repay all debts.

Finance Minister Akylbek Dzhaparov said on Wednesday the government would issue interest-free securities to the population and would use the proceeds to pay off the massive debt comprising 80 percent of Kyrgyz gross domestic product.

"I hope government members will show an example and be the first to buy the securities," he told a cabinet meeting.

The cheapest security will have a nominal value of $2,600, and the government set a limit of $26,500 per person for a one-off "assistance" to the state.

Monthly salaries average less than $100 in the mountainous nation of 5 million people.

The government had earlier opened a special "people's" account at the central bank, inviting compatriots to make contributions -- including in personal jewellery -- to help repay the foreign debt.