The European Bank for Reconstruction and Development (EBRD) and the government of Kazakhstan have agreed on a ground-breaking partnership that will boost investment and drive forward reforms in the country.
The Partnership for Re-Energising the Reform Process in Kazakhstan will engage the world’s major international financial institutions (IFIs), including the EBRD, to channel US$ 2.7 billion provided by the Kazakh government into important sectors of Kazakhstan’s economy. The money will be provided by the country’s Oil Wealth Fund and other sources.
The Partnership will enable the EBRD – already the largest non-oil and gas investor and the largest foreign investor in the country – to significantly increase its investment in Kazakhstan. Government grants, provided by the new fund, will be used to co-finance projects that may not be otherwise possible. The Partnership will also provide enhanced and broader policy dialogue and technical cooperation.
The agreement was signed at the Astana Economic Forum by the Prime Minister of Kazakhstan, Karim Massimov, and the EBRD Managing Director, Olivier Descamps.
Signing the memorandum of understanding, Olivier Descamps said: “This agreement takes our cooperation with the government of Kazakhstan to an entirely new level. It means that the EBRD will facilitate the successful implementation of the national industrialisation strategy, thanks to its delivery capacity and project know-how. This partnership can be more than a smart way to channel money to the economy through IFIs. It may become a way to boost reforms, and to re-energise the transition to a market economy. And it may become a blueprint for other middle income countries.”
The EBRD's Olivier Descamps and Karim Massimov, Kazakhstan's Prime Minister, in Astana today
“We believe Kazakhstan can be one of the largest of our countries of operations,” said EBRD Director for Kazakhstan, Janet Heckman. “We have been looking for ways to increase our investment in the country, and the new Partnership will enable us to be more involved and to contribute significantly more to Kazakhstan, dramatically increasing our own investment.”
The programme will be managed by a coordination council consisting of the participating IFIs and chaired by Prime Minister Massimov. Each of the participants will focus on their areas of strength.
The government envisages the following priority areas under the Partnership: financial sector, small and medium-sized enterprises (SMEs), innovation, skills, investment climate, regional development and institutional reforms. The EBRD will focus on priorities outlined in the recently adopted country strategy, namely diversification of the economy, energy efficiency/green economy and rebalancing the role of the state in the economy.
According to the latest EBRD economic forecast, Kazakhstan is projected to grow at about five per cent this year and again in 2015. Analysing the pace of growth and reforms in the latest Transition Report, EBRD economists note that reforms can increase GDP growth by as much as 1.5 per cent in the long term.
This agreement is the most prominent of recent deals between the EBRD and the government headed by Prime Minister Massimov. Earlier this week, the EBRD and the National Bank of Kazakhstan agreed two new facilities that will enable the EBRD to dramatically increase its lending in local currency. The new facilities will allow the EBRD access to the tenge equivalent of about US$ 1 billion.
Since the beginning of its operations in Kazakhstan, the EBRD has invested close to US$ 6.5 billion in the country’s economy, with more than half of the Bank’s projects supporting the private sector. In 2013 alone, the EBRD invested over US$ 500 million.