The creation of the State Development Bank of the Kyrgyz Republic has been discussed since 2012. It was officially registered on May 31, 2022, its legal address is 17 Razzakova Street. The bank was established with one hundred percent participation of the state in the authorized capital. The only shareholder was the Cabinet of Ministers of the Kyrgyz Republic

— For what purpose was the State Development Bank created and what tasks were set?

— The State Development Bank was established as a financial development institution to stimulate and diversify the Kyrgyz economy. He will do this through investment activities, including investments in large national projects on commercially reasonable terms. The bank’s priority tasks are:

• Stimulating structural shifts in the economy;
• Rehabilitation and development of production infrastructure;
• the formation of an export-oriented manufacturing sector of the economy;
• multiplicative impact on related sectors of the economy;
• promoting the growth of business and investment activity in the regions;
• Equalization of the economic development of the regions;
• ensuring access of economic entities to credit resources on a medium- and long-term basis;
• stimulating investment in the development of domestic enterprises;
• implementation of modern management methods, assessment and control of lending processes and project implementation.

— How much does the Kyrgyz market need the Bank? How will it differ from other Banks and Development Funds?

— As international experience shows, the private sector is limited in financing projects in which there are high risks or low return on investment is expected. In such cases, state development banks support priority national projects, which contributes to the progressive development of the country’s economy. For example, the Japanese Development Bank, the French State Development Bank, the German KfW development Group, Chinese development banks, the VEB Group of the Russian Federation and others.
In this regard, Kyrgyzstan needs a state financial institution capable of accumulating financial resources to provide credit and investment support for projects significant for the economy and the population.
At the same time, commercial banks cover part of the need for financing projects. However, their main goal is to make a profit, accordingly, businesses are offered relatively high interest rates on loans, while there are restrictions in financing projects with a long payback period, as well as in providing large loans or financing by buying a share of the project.
In addition to banks, there are bilateral development funds that significantly strengthen economic relations between Kyrgyzstan and the co-founder country, including financing projects with the presence of a component of the country that formed the capital of the development fund.
At the same time, there remains a shortage of investments in other large projects that are not funded due to the specifics, scale and limitations of activities, and joint financing of such projects with the State Development Bank opens up new opportunities for both business and the financial sector.
Continuous investments in the economy are necessary for progressive economic development, and the National Development Program of Kyrgyzstan plans to reach the investment level of 13% of the country’s GDP by 2026. The implementation of the bank’s tasks should contribute to the development of the economy, as well as the implementation of state development programs and improve the country’s position in key international ratings.

— When will the Bank enter the market and start functioning? What other work needs to be done in order for the Bank to start working and issuing loans?

— Currently, the bank is at the stage of institutional formation, the necessary internal regulatory framework has been developed and approved, the bank’s strategic documents are already being considered, applications for financing are being considered and the first disbursements are being carried out. The bank also works closely with the World Bank and other international development institutions, which will allow the bank to successfully integrate into the community of national development banks and improve its competencies, taking into account the best international experience of development banks.

— Who is a member of the Management Board and the Board of Directors?

— The Management Board of the bank is represented by the Chairman of the Management Board and 4 members of the Management Board of the bank. The Board of Directors consists of 7 people. It includes 4 representatives from the Cabinet of Ministers of the Kyrgyz Republic and 3 representatives from the Jogorku Kenesh. Also today, 4 members are independent directors.
I would like to note that the State Development Bank was formed in the form of an open joint-stock company and corporate governance is built in accordance with the legislation applicable to joint-stock companies, as well as banks.
The supreme governing body is the General Meeting of Shareholders, the supervisory body is the Board of Directors, and the executive body is the Management Board.

— Who will finance, only the state, or is it possible for other shareholders to participate? Who will be the main shareholder?

— The law provides for 100% state participation in the bank’s capital. The sole shareholder is the Cabinet of Ministers represented by the State Agency for State Property Management (GAUGI). Since December 1, these functions have been transferred to the Ministry of Finance. At the same time, the bank, within the framework of cooperation with international financial organizations, has the opportunity to attract borrowed funds to expand the bank’s capabilities.
— What does the Bank’s own financing system look like?
— The main source of financing for the bank’s activities is its own capital, it is also planned to attract borrowed funds on the basis of payment, urgency and repayment on long-term and preferential terms, which are determined within the framework of internal NPAs.
In order to achieve its statutory goals and objectives, the bank plans to focus on financing projects, including equity participation in priority sectors, giving preference to projects:

• with significant socio-economic impact;
• with the increase and/or modernization of the production infrastructure;
• An export-oriented manufacturing sector with higher added value;
• with a high potential for import substitution.

In general, these projects should contribute to the development of the regions. The Bank initially offers 5 loan programs:

1) The direct financing program involves financing business entities directly from the bank. The selection and analysis of projects with their subsequent financing will be carried out in accordance with our strategy.

Basic conditions for financing:
• The interest rate is from 6%. The term is up to 10 years. The minimum amount of financing is from 20 million soms. The maximum is no more than 20% of the net total capital of the bank.

The target group is legal entities operating in the following industries:
• Industry,
• mining and processing of raw materials,
• Green financing,
• IT technologies, E-commerce,
• Transport and logistics.

2) The program of targeted financing through partner banks: this type of lending is considered by the bank as one of the fastest ways to enter the market and receive “feedback” from the business environment.
• The interest rate is 9%. The term is up to 8 years. The minimum amount of financing is from 10 million soms. The maximum amount is no more than 150 million soms per project. The sectors of the economy are the same as with direct financing.

3) The co-financing program involves joint financing of large economic entities with international financial funds and banks of the Kyrgyz Republic.
• The interest rate is from 6%. The term is up to 8 years. The minimum amount of financing is from 20 million soms. The maximum amount is no more than 250 million soms per project. The sectors of the economy are the same.

4) Leasing: Financing leasing operations for all types of agricultural machinery, industrial, technological, production and other equipment, specialized machinery and other property.
• The interest rate is from 9%. The term is up to 10 years. The minimum amount of financing is from 20 million soms. The maximum amount is not more than 20% of the net total capital of the bank.

5) Leasing through partner banks, FCF and other CCF. Financing of leasing operations through credit and financial institutions.

• The interest rate is up to 12%. The term is up to 10 years. The minimum amount of financing is from 3 million soms. The maximum amount is not more than 150 million soms.

— Will the state receive dividends or does it give money once, and then the Bank grows by itself?

— It should be noted that profit-making is not the main purpose of the bank’s activities, while the bank plans to pay dividends in accordance with the legislation of the Kyrgyz Republic.

The state expects the bank to develop priority sectors of the country’s economy, increase investments in new industries, infrastructure, positive GDP dynamics, export growth and other aspects of the socio-economic and integration effect of the bank’s activities.
In this regard, it is planned to increase capital from the state in the first years, in the future — capital growth is expected due to the core activities of the bank and the financial results of its activities.

— What is the development strategy and plan? How will you achieve your goals?

— The State Development Bank, as a new financial institution, needs time to institutionalize and gain recognition and trust from partners and international financial institutions.

The Bank has formed a development strategy and a business plan, within the framework of which the bank will systematically and purposefully achieve its goals.

Thus, for 2023-2026, the bank has outlined the strategic directions of its activities:
• Promoting the development and diversification of the economy
• Institutional development
• development of the bank’s internal potential.

In general, by 2026, the bank intends to take the position of one of the key financial institutions of the country’s development. This is an ambitious, large-scale, but achievable task with the planned achievement of the bank’s goals, the favorable influence of external factors, as well as the effective attraction and use of external and internal capital. For all questions, you can contact this address or submit an online application for financing through the official website.

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