Chairman of the Board of NUH Baiterek JSC Rustam Karagoyshin at the Government session reported that in order to intensify lending to the economy, especially large investment projects, it was decided to create a Guarantee Fund for large businesses, primeminister.kz reports.
The Fund will serve as a tool to involve the liquidity of second-tier banks and increase the attractiveness of financing for both private and public participants.
The main idea of the mechanism is that the state assumes part of the financial risks associated with lending to large projects. This will improve the availability and conditions of financing, which, in turn, will contribute to the development of initiatives significant for the economy. The guarantee fund will be created under the holding company and will be aimed at supporting projects worth 7bn tenge or more.
This fund will be an effective tool to address the issue of sufficiency of collateral for large and strategically important projects. The project initiator must ensure its own participation in the amount of at least 20 per cent of the project cost. The remaining 80 per cent of the project cost will be financed by a loan from BVU and DBK. At the same time, up to 30% of the financing amount will be covered by the holding company's guarantee for creditors," Rustam Karagoyshin explained.
He also noted that in order to achieve the implementation of the Government's objectives to increase GDP in 2025 to 7%, the holding plans to allocate about 8 trillion tenge to support entrepreneurship, housing development and implementation of key national and investment projects with a further increase in financing up to 10 trillion tenge by 2027. These goals require capitalisation of the holding at the rate of 1 trillion tenge annually.
In 2024, the total contribution of the holding company to support sectors of the economy is about 4 trillion tenge.
The business will be incentivised by equating the interest rate at 12.6% (mixing capital and market money) for end borrowers. The main objective of this initiative:
- offering real sector enterprises a fair rate without distorting the financing market, including stopping the practice of ‘cannibalism’ (duplication of products, migration of projects between support operators) between financiers and ‘arbitrage’ on rates (different rates and unequal access of market participants, as confirmed by the observations of Supreme Audit Chamber of the Republic of Kazakhstan);
- reducing the burden on the country's budget with a gradual withdrawal from the practice of subsidising.
With the support of the economy in 2025 up to 8 trillion tenge (taking into account the effect of the TNA influence in project financing) will make it possible to make an additional contribution of holding projects in GDP growth up to 1.3 per cent (GDP forecast 2025 growth of 6.5 per cent, MNE data).
As part of the Head of State's instruction announced at a recent Government session, it is planned to launch a Guarantee Fund for SMEs this year. The capital of this fund will be formed through the participation of the capital of the Damu Fund, mandatory annual contributions of the BVU, as well as funds from the state, large companies and other interested organisations. Within the framework of the creation of the guarantee fund, the functions of Damu Fund will be supplemented with new tasks: the product line of the guarantee instrument will be expanded, the amount of guarantees provided will be increased, and the list of sectors of the economy subject to guarantee will be expanded. It is planned to issue guarantees for new products on the principles of irrevocability and unconditional nature," Rustam Karagoyshin noted.
The launch of the guarantee fund will allow to increase the portfolio of guarantees to 1 trillion tenge by 2027 (+148% compared to 2024) and support more than 50 thousand projects annually, which is five times more than in 2024. At the same time, the main priority will be given to projects that reduce inflation imports into the country.
As part of the implementation of the Energy and Utilities Sector Modernisation National Project for 2025-2029, the holding has been designated as a financial operator.
Thus, the holding will apply financing instruments of the Development Bank of Kazakhstan, BVU, as well as through bonded loans of the Kazakhstan Housing Company (KHC), and other market participants to support the activities of natural monopolies. It also provides for budgetary lending, buyout by the financial operator of bonds of natural monopolies (SEM) from the private sector, as well as financing of SEM (coal-fired generation) through leasing financing through the Industrial Development Fund. Additionally, KJK will act as an agent to provide subsidies for SEM.
To fulfil the objectives of the National Project, the holding plans to finance projects of natural monopolies in the amount of 4.7 trillion tenge over a five-year period. At the same time, in 2025, the need for financing is 283 billion tenge based on the need to cover red zones," Rustam Karagoyshin specified
In general, according to him, the total cost of the holding's promising projects today is more than 25 trillion tenge with the amount of requested financing up to 10 trillion tenge.
Of these, investment projects with the amount of financing in the amount of 8.4 trillion tenge and working capital support programmes - in the amount of 1.6 trillion tenge, of which 700 billion tenge for agro-industrial complex will remain within the framework of subsidised rate, the rest at market rate.
During the Government session, a sectoral breakdown of the holding company's large investment projects worth more than 7 billion tenge, which may be considered by the Guarantee Fund for Large Business, was also presented.
The preliminary amount of financing of such investment projects that can be guaranteed by the holding is 6 trillion tenge.
It was noted that in accordance with the order of the Head of State the volume of preferential lending for spring field and harvesting works through Agrarian Credit Corporation JSC will reach 700 billion tenge, 202 billion tenge has already been issued. Of these, 100 billion tenge was allocated in advance in December last year. If there is a shortage of collateral, farmers can use the guarantees of the Damu Fund.
To increase the pace of renewal of the machinery and tractor fleet, KazAgroFinance launched a programme of preferential leasing of domestically produced agricultural machinery at an annual interest rate of 5%.
In addition, financing of investment projects in the agro-industrial complex will be continued with a priority on solving the tasks of reducing import dependence and stabilising prices. To this end, projects will be financed for the processing of agricultural products and food production with a focus on socially important goods, the introduction of irrigation systems, indoor vegetable production, the development of production and marketing infrastructure, and support for fodder production.
As part of the export strategy, insurance, reinsurance and guarantees for domestic producers are being expanded. An important task is to enter new markets and provide comprehensive solutions for Kazakhstani exports.
In this regard, the holding is launching a trade fund with a target size of $200 - $500 million and forming a pool of export-oriented projects, including the development of poultry enterprises and crop production.
Key export areas:
Consolidation of large producers and traders of crop products (grains, oilseeds and pulses) to expand export channels;
- creation of stable export supply chains and expansion of export geography (PRC, Central Asia, EU);
- reduction of speculative factors in pricing and market stabilisation;
- partnership with major foreign buyers (COFCO and others);
- investment support and involvement of the private sector in trade activities;
- improvement of conditions for agro-producers on transport and logistics services.
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