ADB proposes to create municipal infrastructure fund in Kazakhstan
Baku, Azerbaijan, Sept. 18
By Ali Mustafayev – Trend:
The Asian Development Bank intends to ease financing conditions for small utility companies in Kazakhstan, said the director of the representation of the Asian Development Bank in Kazakhstan Giovanni Capannelli, Kazinform reported.
“We propose to create a municipal infrastructure fund. Until now, our main problem was the creditworthiness of small-scale utilities at the level of cities, settlements to obtain our financing, our investments," Capannelli said.
He added that other international financial institutions provided certain types of financing to small-time companies in the region, but interest rates were quite high, which creates problems on the way forward in terms of fiscal sustainability.
Therefore, now the discussions are being held with the Government on the creation of a municipal infrastructure fund, he said.
According to Capannelli, ADB is very interested in working out a decision on granting financing in tenge.
"This is very important, taking into account that purchases are made in local currency. In February of this year, the agreement with the National Bank of the Republic of Kazakhstan on $200 million was signed. The fund will be used for the nearest projects. In addition, the issue on bonds in tenge will be discussed," he explained.
Capannelli also said that long-term financing for up to 25 years can be provided for the sovereign projects, at the rate of "libor + 0.6 base points", which is now 1.4 percent. He further mentioned that development of a mechanism to finance the tenge.
This mechanism will include the combination of sovereign conditions with non-sovereign ones, so that, for example, the government could undertake a certain share of the project. Further, instead of the 14-15 percent market rate, it can be set mixed with the rate for concessional financing. Specific conditions will be worked out for each specific project.