«The Russian-Kyrgyz Development Fund (RKDF) introduces financing in national currency to activate the business sector, as well as to reduce the currency risks of entrepreneurs in long-term financing,» head of the Fund Artyom Novikov told 24.kg news agency.
According to him, the RKDF intends to provide financing to business in soms below the discount rate. This opportunity arose thanks to the support of the Cabinet of Ministers and the Ministry of Finance. A tool for direct currency swap operations between development funds and commercial banks has been developed. The soms received by the fund can be used to finance priority sectors of the economy below the rate of the National Bank of the Kyrgyz Republic.
«As for competition with banks, we work in different sectors. Commercial banks in Kyrgyzstan mainly lend to the trade sector, which the RKDF does not work with. The key sectors of the economy in our area of interest are agro-industrial processing, light industry, production of building materials, mechanical engineering, renewable energy and others. At the same time, good synergy arises when the fund lends for investment purposes, and working capital can be raised through commercial banks,» Artyom Novikov said.
The head of the RKDF also added that business development requires long-term and cheap money. Therefore, the fund specializes in providing financing for a long period, up to 10 years.
«Today, not a single bank in the republic lends for such a period. The cheaper a business can get money, the more enterprises it can create and the more jobs our citizens can get. I think that RKDF financing below the National Bank discount rate will stimulate the market to lower interest rates. This is an absolutely normal process. Let me remind you that with the opening of the Russian-Kyrgyz Development Fund (since the end of 2015), interest rates on long-term loans in the country decreased in foreign and national currencies by 4.94 and 1.55 percentage points, respectively,» the head of the RKDF concluded.
