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Wednesday 16 September 2020

Kazakhstan Launches an Agricultural Loan Guarantee Mechanism


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NUR-SULTAN / ex ASTANA (Ministry of Agriculture press service) — A guarantee mechanism for agricultural loans from second-tier banks (STB) for amounts up to 3 bln tenges by means of the JSC Financial Support Fund for Agriculture (FPSH) has been introduced in Kazakhstan.

The loan guarantee mechanism for STB loans through the FPSH has become accessible to Kazakh farmers. This new form of support for farmers aims to reduce the credit risks of commercial banks and increase the attractiveness of financing for the agricultural sector. The Kazakh government expects that the new mechanism will encourage second-tier banks to actively lend to agriculture.

Producers (JSCs, LLPs, farmers and agricultural holdings…) who plan to implement agricultural investment projects with the help of loans from STBs can qualify into the guarantee system. The terms of the guarantee provide for the issuance of a loan of up to 3 bln tenges at a rate not exceeding 17% per annum for a period of up to 10 years. The guarantee fee is 30% of the guarantee amount, of which 29.9% is assumed by the local executive body and 0.1% is paid by the agricultural producer.

The guarantee will be provided for the implementation of investment projects in all types of activities in the agro-industrial complex, as well as in the field of food production. At the same time, within the framework of the guarantee, there are priority investment areas: dairy farms; poultry meat breeding; intensive market gardening; greenhouses; sugar beet cropping and beet sugar production; cereal growing; vegetable and fruit processing; vegetal oil and fat production.

The fund provides guarantees up to 50% of the loan amount. However, the guarantee amount for priority investment projects prior to commissioning can be up to 85%. After the commissioning of the project, the guarantee amount is reduced to 50%.

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