EBRD to provide $300 million in "selective" investment

The European Bank for Reconstruction and Development (EBRD) will invest up to US $300 million to strengthen Kazakhstan's economy over the next two years. "Our objective is to invest primarily in the private sector with some public sector involvement. We do this on a very selective basis. Where we feel we can have an impact, that's where we are involved," Suzanne Gaboury, senior banker for Central Asia with the EBRD, told IRIN from London. Future EBRD investments will be in a combination of the domestic corporate sector, private sector, foreign investors, limited state projects as well as for continuing funding of the ongoing Trade Facilitation Programme (TFP) and Small Business Programme (KSBP). The latest EBRD report shows that local bank participants in the KSBP have disbursed more than 21,000 loans (up to $200,000) to Kazakh small and medium-sized enterprises (SMEs) in recent years. "We have made large investments so far in the financial institutions sector, for example. And actually our KSBP is very successful where we are reaching down to the SMEs. We also have some other projects in infrastructure, transport, power and agro business. So it's across a broad range of areas," Gaboury said. The EBRD noted that Kazakhstan's economic performance has improved over recent years and that the country continues to make progress towards the implementation of the principles envisaged in the agreements with the bank. "There is a large macro economic development which has been introduced, and obviously they are benefiting from improved oil revenues. It seems that the operation of the banking sector has been a catalyst for improvements in the overall business environment," Gaboury explained. She added that the central bank had been operating independently, making its own decisions, which was contributing to the development of the economy. EBRD statistics reveal that Kazakhstan's economic growth has averaged over 10 percent since 2000, mainly due to the oil and gas industries. However, according to a UNDP report, diversification of the economy is needed to further reduce poverty in the country, a regional leader in terms of both economic growth and reforms. The recent EBRD report supported this view. Kazakhstan faces two critical challenges to sustain the economic development. Firstly, the economy "has to become more diversified to better withstand future commodity price shocks [in particular oil and gas], and provide economic opportunities to the population outside the resource sector." Secondly, there is a need to improve governance both in the public and in the private sectors, involving continued efforts to fight corruption, the bank argued. "There is something that continues to evolve. There have been improvements, the legislation has been improving generally... but it is something going both back and forward," the EBRD official said. "What we would provide to the government in terms of lending has clear conditionalities such as transparency, and they have been trying to take those things on board."