The European Bank for Reconstruction and Development (EBRD) is supporting micro, small and medium-sized private businesses in the Kyrgyz Republic by opening a local currency credit line equivalent to US$ 2 million for Bank of Asia CJSC, aimed at its MSME clients.
The credit line will be provided under the EBRD’s Early Transition Countries (ETC) Local Currency Loan Programme (731KB - PDF), which aims to increase local currency lending, enabling borrowers such as local enterprises, banks and microfinance organisations to avoid currency exchange risks. The programme is supported by the ETC Fund* and the US and Swiss governments through a targeted local currency risk-sharing fund for ETCs.
“The EBRD is stepping up efforts to support the development of local currency markets across its countries of operations, and this som loan to Bank of Asia – our new partner – is one of several steps we are taking towards that goal in the Kyrgyz Republic. With this five-year senior loan, the EBRD is also expanding its network of financial intermediaries by starting a relationship with a new partner bank,” said Mike Taylor, the EBRD’s Financial Institutions Director for Central Asia, Caucasus and Mongolia.
Taalaibek Dzhumataev, Chief Executive Officer of Bank of Asia, added: “I am proud that our cooperation with the EBRD is starting with a project that aims to support small businesses. The increase in local currency lending to the MSME sector in the Kyrgyz Republic will help our clients to avoid exchange rate risks.”
The Kyrgyz Republic is one of six countries which signed a Memorandum of Understanding with the EBRD aimed at developing local capital markets. In the memorandum, the Kyrgyz authorities stated their intention to reduce dollarisation and strengthen the country’s capacity to intermediate savings and investments through the use of Kyrgyz som.
To date, the EBRD has invested a total of US$ 565 million in over 100 projects across various sectors of the Kyrgyz economy, mobilising approximately US$ 720 million of additional financing for those ventures from other sources.
* The ETC Fund is supported by: Canada, Finland, Germany, Ireland, Japan, Korea, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Taipei China and the United Kingdom.