Last year, the Eurasian Development Bank (EDB) adopted a new work strategy for the next five years. Separate plans for cooperation between the bank and the participating countries are now being adopted.
Kyrgyzstan is no exception. But in order to get financing, it is first necessary to submit worthwhile and estimated projects.
Chairman of the Board of the EDB Nikolay Podguzov told what projects in Kyrgyzstan they intend to invest in and why the bank is not yet ready to finance the largest and most important construction projects in the republic.
Why there is little investment
We can hardly say that Kyrgyzstan is in the zone of special attention of the EDB. The volume of lending in the country is modest. As of today, the Eurasian Bank is considering projects worth $100 million. An agreement has already been concluded with Aiyl Bank and financing has been provided for the development of small and medium-sized businesses.
«We are actively working on a project on creation of a data center. I hope it will be implemented. There are a number of projects on creation of logistics complexes and in the hydropower sector,» Nikolay Podguzov said.
In total, over the next five years, the EDB plans to invest at least $160 million in projects in Kyrgyzstan.
This amount is included in the strategy of cooperation with the republic. It was agreed with the Cabinet of Ministers and adopted. Apparently, the officials failed to prove that we need more funds. There is one more point that almost all major development institutions regularly talk about, from which the Kyrgyzstanis are trying to get long-term money. This is the quality of projects.
Nikolay Podguzov noted that the culture of project financing is less developed in the case of small member states of the bank. More internal work needs to be done with the client here in order to package up the project. In addition, the size of the country’s financing directly depends on the borrowers and their activity. If companies are ready to adapt to the requirements of the bank, then the project will be implemented.
About Kambarata-1 and railway
Interestingly, the bank’s plans do not currently include large investments in the country’s significant projects for the construction of Kambarata HPP-1 and China — Kyrgyzstan — Uzbekistan railway. Theoretically, this is possible, but only after the Cabinet presents all the details and calculations.
«Now we want to take an active part in structuring the project for the construction of Kambarata HPP- 1. Construction of the station was widely declared. It is important now to properly arrange it so that it can be financed. It is important that all interested parties participate in its creation. Then it will be possible to achieve its payback model. The project is large, it solves many problems of the water and energy complex of the entire region,» Nikolay Podguzov said.
If the project is packaged up successfully, then Kyrgyzstan may receive money for the construction of Kambarata-1.
«It is clear that all of us are not able to do it on our own. But it will still be a significant contribution, perhaps, for several hundred million dollars,» the head of the EDB said.
Another major project that Bishkek is actively promoting and wants to implement is the construction of China — Kyrgyzstan — Uzbekistan railway. They have been talking about it for a long time, but so far it has not come to the real start of the project.
Kyrgyzstan plans to announce launch of the project in September 2022 at the summit of the Shanghai Cooperation Organization in Samarkand (Uzbekistan).
However, everything is also complicated here. No deadlines or possible amounts of funding have yet been announced. To begin with, investors need detailed calculations. Without them, it is impossible to talk about the timing or the amount of funding.
«We always look positively at such projects. But there must be project documentation, some kind of model. We cannot finance such a project on the basis of verbal interventions. There should be figures that we can look at and say that we are ready for funding,» Nikolay Podguzov said.
Where are loans in soms and drams?
To date, the bank issues loans mainly in four currencies — the dollar, euro, tenge and rubles. The ratio of the currencies in the loans is approximately equal. Kyrgyz som and Armenian dram are not represented in the credit basket.
«I would like to switch to dramas and Kyrgyz soms. There are certain prerequisites for this. I think it will be finally done. We can borrow in all local markets and provide loans,» Nikolay Podguzov explained.
In addition, the bank notes that they will not cut funding due to world events. They even declare an increase in interest in the products of the participating countries. Since the second half of the year, there has been an increased demand from borrowers in Armenia, Kyrgyzstan and Tajikistan.
This allows us to expect that the planned investment of $1.3 billion per year will be fulfilled.
Nikolay Podguzov
«In general, we will not experience a failure in terms of portfolio dynamics. Most likely, it will be necessary to increase the volume of investments for the next five-year period. We are implementing our funding strategy ahead of schedule. This trend persists for all states that are small shareholders. We look forward to additional capitalization of the bank in the next five years. We plan it by about $100 million. But let’s see how the shareholders react to the growth of the loan portfolio,» he emphasized.
With Uzbekistan, but without Hungary
There is another point that the authorities of Kyrgyzstan should pay special attention to — the expansion of the number of countries participating in the Eurasian Development Bank. After all, competition for loans will only grow in this case. It is highly likely that this will happen very soon. The EDB starts negotiations with Uzbekistan on the terms of joining the bank.
«The Board of the bank has formulated certain directives for us. We held talks with the government of Uzbekistan and decided on the conditions under which the republic could join the bank. Uzbekistan’s accession process is underway. It is difficult to voice the time of its completion, I hope this year,» the Chairman of the Board of the EDB commented.
As for other states, there are no active negotiations on joining the bank. This is also true for Hungary, which previously declared its desire to become a member of the financial institution.
