The Asian Development Bank (ADB) has approved a $1 billion loan to help Kazakhstan continue government programs to strengthen the economy in the face of recent challenges, the ADB said in a release on August 21.
“This loan from ADB's Countercyclical Support Facility will give the country the fiscal leeway it needs to mitigate the unanticipated and significant negative impacts of the steep decline in world oil prices and the economic slowdown of the neighboring countries," said Lotte Schou-Zibell, Principal Economist in the Central and West Asia Department. “It will help the government modernize infrastructure and maintain spending programs for job creation, social services, support to low-income households, and private sector development, particularly for small businesses."
The programs will be supported by transfers from the National Fund of the Republic of Kazakhstan, ADB's loan, and proposed funding from other development partners. The National Fund of the Republic of Kazakhstan safeguards the state's petroleum earnings, uses them to maintain economic stability, and ensures their availability for future generations.
This ADB loan will support efforts to stabilize the economy following the recent move by the government and the National Bank to adopt a free floating exchange rate together with inflation targeting.
The loan, from ADB's Ordinary Capital Resources, will be released in two tranches of $500 million each, and will support the implementation of key policy reforms. The loan has a 5-year term, with the interest rate determined in accordance with ADB's LIBOR-based lending facility, plus 200 basis points.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members–48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.