Development Fund of Kyrgyzstan: the Russian credit is used for its intended purpose

Printer-friendly versionPDF version

The development fund of the Kyrgyz Republic makes comments on the appeared messages in a press concerning ostensibly no-purpose use of means of the Russian credit at a rate of 300 million dollars. The development Fund underlines that the given information is a fiction.

The arrangement on allocation of the soft loan of 300 million US dollars by Russia has been reached at a bilateral meeting of presidents of Kyrgyz Republic and the Russian Federation on February 3rd-4th, 2009. Russia has listed the given financial assets on the Kyrgyzstan’s Ministry of Finance’s settlement account on 30th of April, 2009. The Kyrgyz Republic should pay back 0,75 % annually on service activities of the given means. Thus the first payment on the basic debt should be made in 2016, and last in 2049. The Kyrgyz party makes interest payments every half a year, in March and September.
The government of Kyrgyz Republic decided to allocate money resources at a rate of 286,3 million US dollars to Development Fund from the Russian credit in 300 million US dollars for realizations of priority projects.
According to the Ministry of Finance, the first payment of interests has been made in September, 2009. From the end of August, 2009 means of the Russian loan have been gradually passed under management of Development Fund. Now therefore the state corporation became responsible for service activities of this part of an external debt.
According to the developed schedule of debt service between Development Fund and Ministry of Finance, Development Fund has listed the credit interests on 1st of March, 2010 at a rate of 1mln US dollars (44 million 985 thousand 603, 24 soms). The Ministry of Finance of Kyrgyzstan has listed this sum, that is 1 million 131 thousand 250 dollars in a form of interests payment on Russian credit.
Moreover according to the signed agreement, Russian credit should be spent for the economical development of Kyrgyzstan that is on financing of priority projects. Thereunder as it was repeatedly mentioned by the Development Fund, means of Russian credit were distributed as follows:
Last year 100 million US dollars has been allocated to Public Limited Company “Elektricheskie stancii” in form of credit for building Kambar-Ata GES-2. 50 million US dollars have been invested in the authorized capital of the microcredit company on agricultural manufacturers crediting. Other means are placed on accounts of National Bank of Kyrgyz Republic and Investment Banks of Kyrgyz Republic.
A part of available cash assets were distributed in Eurobonds of the Russian emitters "Gazprom", «VTB », "Alrosa" and numbers of other high liquid bonds from October 2009 to February 2010.
The means were returned into accounts of Development Fund from the moment of bonds repayment.
According to the budget for 2010 accepted by Board of directors, an investment portfolio of Development Fund in 2010 will be 7 billion soms (more than 157 million dollars). The investment portfolio includes both means of the Russian credit, and other involved means. The Development Fund plans to invest means in priority projects for economy of Kyrgyzstan: creation of the leasing and hypothecary companies, projects within the limits of state-private partnership, the program «Accessible financing» through five authorized banks, and also on increasing agrarian and Commodity Corporation’s capital.
All of the projects provide the guaranty of the money-invested means. Plus according to the agreement the Development Fund guarantees service activities of the Russian credit, which means that the Development Fund lists in Ministry of Finance of Kyrgyzstan. And Ministry of Finance in its turn lists to Russian party.
In summary, the Development Fund does not break arrangements with the Ministry of Finance of Kyrgyzstan and with the Russian Federation.
The messages concerning an inefficient, opaque management of actives, and also concerning inappropriate use of Russian credit in mass-media are invalid.
As for the participation to the Development Fund’s actives, in particular, to means of the Russian credit of the head of MGN Group Evgeniy Gurevich who is being accused of participation in the Italian mafia, The Development Fund officially informs:
The contract of the Development Fund with the MGN Group which was chosen as an operating company has become invalid on 1st of March 2010. As the Development Fund’s management policy of risks did not allow transferring means to the company whose own capital is less then means transferred to it, the contract of the Development Fund with an operating company actually was not executed even within the contract term. So throughout all the term of its activity the Development Fund had been operating the actives entrusted to this company by itself.

The Development Fund is the largest corporation which activity is directed on development and stimulation of priority and strategic branches of economy of the Kyrgyz Republic. The Development Fund is a direct participant of the state-private partnership, a link between the state and a private sector. The corporation is aimed to operate effectively financial actives of the state, being guided by the best international experience, modern methods of management, estimation and control over procedures of crediting. The fund is created in the form of specialized financially-credit institution with absolute participation of the state in the share capital.