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EBRD lends support to new Kyrgyz bank, emphasising importance of financial sector to private sector growth
Strengthening the financial sector remains a key challenge in Kyrgyzstan, said Charles Frank, First Vice President of the European Bank for Reconstruction and Development (EBRD). Speaking in Bishkek today, Mr Frank welcomed the creation of the Kyrgyz Investment and Credit Bank (KICB), which is due to open in September with significant backing from the EBRD and other western investors.
Mr Frank’s comments came during his visit to Kyrgyzstan, where he met with President Akayev and senior officials in the Government, to discuss the country’s progress towards achieving a free and sustainable market economy. "Kyrgyzstan has been making good progress," said Mr Frank, pointing to recently defined company and insolvency laws, the privatisation of many state-owned small and medium-sized businesses, and the country’s membership of the World Trade Organisation. "But there are still challenges, including the implementation of laws and the need to tackle large-scale privatisation – such as the telecommunications and power sectors."
Mr Frank said the financial sector was of particular importance. "A strong and thriving market-based economy requires a healthy financial sector, and to achieve that you must target specific institutions and set them out as an example for others to follow," he said. The KICB, Mr Frank explained, will provide commercial lending and corporate banking services to the Kyrgyz private sector.
The EBRD expects to contribute US$ 1.4 million to KICB’s estimated start-up capital of US$ 7 million. The funding, said Mr Frank, will allow the bank to provide support to the country’s developing commercial and industrial sectors. Looking ahead, Mr Frank explained that the EBRD hopes to deepen its relationship with KICB through the provision of credit lines to support local trade and small businesses.
"First we build a strong bank and then we help it build a strong local private sector," Mr Frank said. "The staff of KICB will be trained to recognise good investment opportunities – companies that have good ideas and sensible business plans to action those ideas. They will put good money behind good business."
With a total commitment of US$ 160 million, the EBRD has financed 11 projects in Kyrgyzstan, including the country’s first credit line designated for on-lending to small businesses. With funding made through local banks, the EBRD’s finance has helped 46 small and medium-sized businesses. Other projects include the Talas Transmission Network Improvement Project, local shoe company, BiStyle, and the Hyatt Hotel which is due to open by the end of this year.
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