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EBRD Approves the Country Strategy for Kyrgyzstan

Thursday 26 March 2015

(EBRD press service) – The European Bank for Reconstruction and Development (EBRD) has launched a new strategy for the Bank’s activities in the Kyrgyz Republic which will guide EBRD investment and policy dialogue in the next four years. New strategic priorities in the country: cross-border linkages, SME growth and sustainable public utilities.

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The strategy, approved by the shareholders on 25 February 2015, sets out the following priorities for the EBRD’s work in the country:

  • Strengthening regional cross-border linkages: The EBRD will facilitate economic and trade cooperation and integration with other countries within the region;
  • Enabling SMEs to scale up and bolster competitiveness: The Bank will support sustainable growth of SMEs – especially those small businesses with potential to grow into mid-sized corporates – through both investment and advisory services;
  • Promoting sustainability of public utilities through commercialisation and private sector participation: The Bank will continue to offer its recognised expertise and delivery models to municipal utilities and to support modernisation of assets and private sector participation.

The EBRD will also continue to support energy efficiency projects through dedicated credit lines.

The previous strategy for the Kyrgyz Republic was approved in 2011. Since then, the EBRD actively increased its support to the country’s economy and invested €207 mln in 56 projects in the country. In total, since the beginning of its operations in the country in 1992, the Bank has invested about €570 mln in the Kyrgyz economy. Almost three quarters of the Bank’s current investment in the country is aimed at supporting sustainable energy through cleaner energy generation or energy efficiency improvements for businesses and households.

SMEs

The majority of businesses in the Kyrgyz Republic are small and medium sized (SME). Therefore, a key lesson for the Bank’s future engagement with SMEs has been the importance of deploying instruments specifically designed for early transition countries (e.g., direct lending facilities, medium-sized co-financing facilities through partner banks), and dedicated donor funded programs (e.g., capacity building, advisory, studies), as well as leveraging synergies between financial investment and advice for small businesses. Under the newly launched EBRD Small Business Initiative, the Bank should seek to further widen the range of SME products and services tailored to the needs of local companies, in order to improve response speed and increase flexibility of support. This should allow EBRD to strengthen its competitive position and attractiveness for other donors to channel their funds through the Bank, thanks to a more effective and efficient delivery, and increased regional reach.

In addition, to scale-up operations in the country in order to increase transition impact during the next strategy period, the Bank will need to confront objective constraints, in particular the country’s small banking sector and the small universe of eligible financial partners resulting from compliance and credit risks of majority of banks, that limit the amount of financing EBRD can provide to and through the sector. Addressing these challenges will require exploring additional opportunities for risk-sharing and other ways to increase exposure.

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