EDB and Kyrgyzstan sign agreements on financing two investment projects with ACF resources
Bishkek, 20 March 2014. Two agreements on project financing one for the Bishkek-Osh Road Rehabilitation and the other for agricultural machinery supplies were concluded today in Bishkek between Eurasian Development Bank (EDB) and the Kyrgyz Republic. The documents were signed by Chairman of the EDB Management Board Igor Finogenov and Minister of Finance of the Kyrgyz Republic Olga Lavrova.
Both projects are to be financed using the resources of the EurAsEC Anti-Crisis Fund (ACF), which are managed by EDB.
Under the first agreement, US $60 million will be allocated to finance the rehabilitation of Jalal-Abad — Madaniyat section of the Bishkek-Osh road. The section stretches for 67 km connecting the northern regions of the country to the southern ones. It was not rehabilitated during the implementation of the first three phases of the Bishkek-Osh Road Rehabilitation Project, which was financed by Asian Development Bank (ADB).
EDB will be implementing its project in the format of co-financing with ADB, whose resources will be used to finance rehabilitation of Bishkek — Kara-Balta section of the road. In addition, ADB’s environmental and social safeguard policies and expertise will be used in the Project preparation and implementation. The financing is to be provided for 20 years on concessional terms (1 % annual with a grace period of eight years).
Under the second agreement, EDB is to extend to the Ministry of Finance of the Kyrgyz Republic US $20 million on the same terms to finance purchases of agricultural machinery for the Kyrgyz Republic.
The financing will be used to buy around 4,200 units of agricultural machinery, mainly tractors with detachable equipment and combine harvesters. Around US $2 million will be used to create the infrastructure for the after-sales maintenance of the machinery purchased.
During two years, the Ministry of Finance will on-lend the loan proceeds to farmers through Kyrgyz Aiyl Bank to finance machinery leasing. As the sub-loans have a shorter maturity, farmers will be able to lease machinery for the amount of up to US $120 million within 20 years. And using the interest paid by farmers on the sub-loans, the Ministry of Finance of the Kyrgyz Republic will create an earmarked fund to continue lending for leasing purposes after the highly concessional ACF loan is repaid.
“The projects, for which documents were signed today, are the first investment projects of the ACF, whose resources are managed by EDB. So far, we have provided only stabilisation credits for budget support with the Fund’s resources,” noted Chairman of the EDB Management Board Igor Finogenov. “In the Kyrgyz Republic, we have managed to expand the format of ACF’s integration activity for the first time ever. It is of principal importance for us: now, the case actually is that of real assistance provided to one of the EDB and ACF member states by the other participants to resolve its pressing problems. And this assistance is visible.”
Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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The EurAsEC Anti-Crisis Fund (ACF) amounting to US $8.513 billion was formed on 9 June 2009 by the governments of the same six countries. The objectives of the ACF are to assist the member countries in overcoming the consequences of global financial crisis, ensure their economic and financial stability, and foster integration processes in the region. The ACF member countries signed the Fund Management Agreement with Eurasian Development Bank giving it the role of the ACF Resources Manager.
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