BEIJING (AIIB press service) — The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved a loan of €661.8 mln (≈$750 mln) to provide budgetary support to the Government of Kazakhstan in mitigating the adverse impacts of COVID-19 on the health, income and economic opportunities of the country’s population.

The pandemic is disrupting Kazakhstan’s economic activities. Employment and livelihoods are adversely impacted, particularly among the poor and vulnerable. Women are likely most affected as they account for more than 65% of the labour force in hard-hit sectors including hospitality, education and retail trade. The oil price shock has significantly brought down export revenues. Without a fiscal response, the economy is expected to contract in real terms by 5.5% in 2020. Poverty rates may reach 11-13% from the current 6.6 percent level.

The loan will finance Kazakhstan’s COVID-19 Active Response and Expenditure Support (CARES) Program, which supports the country’s immediate COVID-19 health policy response, social protection and employment recovery measures, as well as stimulus measures. Funded by AIIB’s Crisis Recovery Facility (CRF) and cofinanced with the Asian Development Bank (ADB), the financing will fund measures to mitigate the impacts of higher food prices on vulnerable groups, an increase in social payments, new tax incentives to alleviate the financial burden of businesses and cash payments to the unemployed.

“Managing the spread of the disease and containing poverty are the Program’s priorities. This financing responds to the country’s countercyclical funding needs to achieve these objectives”, said AIIB Vice President, Investment Operations, Konstantin Limitovskiy. “We will continue to coordinate with the international community to support countries’ efforts to protect the poor and vulnerable and support economic resilience during this challenging period.”

While AIIB does not have a regular instrument for policy-based financing, the Bank is extending such financings on an exceptional basis under the CRF to support its members through programs cofinanced with the World Bank or ADB.

The CRF, created as part of the coordinated international response to counter the COVID-19 crisis, has an initial size of $5-10 bln to support AIIB members’ urgent economic, financial and public health financing needs. As of end-June 2020, AIIB has approved a total of 13 projects amounting to over $5.5 bln to support 11 members to navigate the challenges caused by these highly uncertain times. AIIB is currently reviewing additional projects from its clients. Projects being proposed under the CRF can be found here.