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EBRD President: funding on rise in Kyrgyz Republic
Early Transition Countries initiative helps boost investment, donor grants
In the Kyrgyz capital of Bishkek today EBRD President Jean Lemierre told
reporters the Bank has more than tripled its investments in the country this
year and catalysed an increase in grant funding for efforts to improve the
country’s investment climate. These results are in line with the Bank’s
six-month-old Early Transition Countries (ETCs) initiative, Mr Lemierre said.
The initiative focuses on the seven poorest countries in the Commonwealth of
Independent States: Kyrgyz Republic, Armenia, Azerbaijan, Georgia, Moldova,
Tajikistan and Uzbekistan.
Mr Lemierre said the focus the initiative has brought to these countries is
among the reasons why the Bank’s investments in the Republic have grown to
€29.4 million. Of this, the amount invested outside the mining sector has
tripled to €9 million in 2004, compared with €3 million last year.
The Bank signed two new deals this morning. One is a $3 million credit line to
AKB Kyrgyzstan Bank for use in lending to micro and small businesses, the
second loan of this size to AKB in just one year. The loan is partly financed
by the government of Taipei China. The credit lines are part of the EBRD’s
micro and small enterprise credit programme which, since its inception in the
Kyrgyz Republic in 2002, has financed 11,500 businesses with assistance from
the EU, the US, Switzerland and the International Finance Corporation.
The EBRD also signed a five-year loan of €5.5 million wiith Interglass, a
subsidiary of German Steinert Industries, to finance two new production lines
and energy efficiency measures at the company’s Tokmak glass plant. In 2000
Steinert acquired a bankrupt float glass plant which it rehabilitated,
modernised and re-opened in 2002. Interglass produces glass of international
standard for the Kyrgyz construction industry and is one of the leading glass
manufacturers in the CIS. Steinert Industries is a major foreign investor in
the country, with holdings including cotton and textiles.
Six new donor projects were also announced today: some are directly funded by
individual donor governments via the EBRD, while others are covered by the new
multi-donor ETC Fund launched just one month ago. The Fund already has €14.8
million in pledges from Finland, Ireland, Japan, Netherlands, Switzerland,
Taipei China and the United Kingdom.
The six donor-backed projects are:
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launch in the Kyrgyz Republic of the EBRD’s Business Advisory Services
programme for hiring local consultants to provide advice to small businesses
in clearly defined projects such as market research, management information
systems and business planning.
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preparation of a sustainable programme for training judges to administer
commercial law.
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projects to improve rural and urban access to telecommunications,
particularly the internet. These include a telecoms ‘incubator’ project,
funded by the ETC Fund as part of the EBRD’s TurnAround Management programme,
and legal advice, funded by Canada, to assist the Kyrgyz authorities in
promoting the widespread extension of telecoms in remote areas.
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funding for project preparation and post-investment advisory services for
enterprises eligible for financing under the EBRD’s Direct Investment
Facility and its Direct Lending Facility.
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funds for the Business Environment and Enterprise Performance Survey
through which the EBRD assesses the business community’s perceptions of vital
aspects of the business climate, ranging from the reliability of essential
services, such as electricity, to the impartiality of judges.
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a TurnAround Management programme project for community development,
funded by Luxembourg to help alleviate poverty in the village of Pokrovka in
the Talas oblast by assisting the community to add value to farm produce (eg
turning milk into cheese and yoghurt).
THE ETC INITIATIVE
The EBRD focuses on supporting sustainable private sector investments, but
doing so is particularly challenging in Early Transition Countries as the
business, regulatory and legal environments still require significant
development to effectively support these investments. Grants from donors will
encourage the transition of these ETCs from centrally planned to market
economies, a process in which they have lagged the rest of the region in which
the EBRD invests.
Contact in Bishkek:
Dinara Abykanova - Tel: +996 312 53 0017
The goal of the ETC Initiative is to stimulate market activity by using a
streamlined approach through increased financing of smaller projects,
mobilising additional investment, and facilitating ongoing economic reform. As
part of the Initiative the Bank accepts higher risk in ETC projects it
finances, while still respecting sound banking principles. The EBRD has also
undertaken to raise donor interest in the ETCs, to provide grants for projects
to assist in various aspects of the countries’ economic transition.
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