The government of Kazakhstan and the European Bank for Reconstruction and Development (EBRD) have signed an agreement to engage the EBRD and other international financial institutions to direct $2.7 billion from the Kazakh government into priority sectors of the country’s economy. The new Partnership for Re-Energising the Reform Process in Kazakhstan is intended to boost investment and support ongoing reform in the country and was signed on May 23 at this year’s Astana Economic Forum by Prime Minister of Kazakhstan Karim Massimov and EBRD Managing Director Olivier Descamps.
The money for the new fund will come from Kazakhstan’s Sovereign Wealth Fund, which two years ago was predicted to be worth $100 billion by 2015. The EBRD, already the biggest non-oil and gas investor in the country, will be able to increase its investment in Kazakhstan, as grants from the fund will be used to co-finance new projects. The agreement also calls for increased technical cooperation and policy dialogue.
Priority areas for Kazakhstan’s government under the new partnership include the financial sector, small and medium-sized enterprises, supporting innovation, skills development, improving the investment climate and fostering regional development and institutional reforms. The EBRD’s country strategy for Kazakhstan adopted at the end of 2013 focuses on the diversification of the economy, balancing the role of the state in the economy and promoting low-carbon growth and energy efficiency.
Massimov will chair the coordination council that will manage the new programme. Participating international financial institutions on the council will focus on their areas of strength, corresponding to the programme’s priorities.
The agreement takes cooperation to a new level, Descamps said at the signing. “It means that the EBRD will facilitate the successful implementation of the national industrialisation strategy, thanks to its delivery capacity and project know-how. This partnership can be more than a smart way to channel money to the economy through IFIs [international financial institutions]. It may become a way to boost reforms, and to re-energise the transition to a market economy. And it may become a blueprint for other middle income countries.”
The latest agreement comes on the heels of another major deal signed on May 21, giving the EBRD access to $1 billion in local currency through the National Bank of Kazakhstan for lending within the country.
Kazakhstan’s economy is predicted by the EBRD to grow at a rate of 5 percent this year and in 2015. The EBRD invested more than $500 million in Kazakhstan in 2013 and has invested nearly $6.5 billion in the country since beginning operations there.