Kazakhstan Borrows over Billion Dollars: MPs Ratify Agreement

The Majilis of the Parliament ratified loans that Kazakhstan plans to take from several foreign development banks, Orda.kz reports.

Kazakhstan borrows 52.3 billion yen ($350 million) from the Asian Development Bank with a maturity of 15 years, including a grace period until June 1, 2027. The Ministry of Finance will service and repay the loan using funds provided in the national budget for the next financial year. 

The choice of Japanese yen currency is due to historically low base interest rates in Japan, as well as the close correlation between the Kazakhstani tenge and the Japanese yen. These funds will support the Government's priority measures, including financing of transport infrastructure, industry, education and other priority areas, the contract conclusion specifies. 

The ADB loan has a 15-year repayment period, including a three-year grace period. The interest rate is TONA + spread (0.5%). The reserve fee is 0.15% per annum.

Servicing and repaying the loan will be carried out using funds from the Republican budget per the financial conditions established in the Loan Agreement.

Kazakhstan will take a second loan from the Asian Infrastructure Investment Bank for almost the same amount —52.7 billion Japanese yen (350 million dollars).

The yen currency was chosen due to Japan's historically low base interest rates and the close correlation between the Kazakhstani tenge and the yen.

The finances will support the government’s priority measures, including funding for transport infrastructure, industry, education, and other priority areas.

The AIIB loan is provided to the Republic of Kazakhstan with a 15-year repayment period, including a three-year grace period.

The third agreement is for an 84.9 billion Japanese yen loan from the International Bank for Reconstruction and Development. It will be used for the country's social spending. 

The IBRD loan has a repayment period of 11 years, including a five-year grace period.

Kazakhstan joined the IBRD in 1992. Kazakhstan's share in the IBRD is 0.17%. The World Bank's investments in Kazakhstan amount to approximately $8.2 billion.

Original Author: Ilya Astakhov