IFC

International Finance Corporation (IFC)
IFC is a member of the World Bank Group

The Kyrgyz Republic joined IFC in 1992 and presently holds 0.07% of its equity. IFC's liaison office in Bishkek was opened in 1997. At the moment IFC is represented by investment and advisory services programs.

IFC STRATEGY AND PROGRAM IN THE KYRGYZ REPUBLIC

The strategy of IFC office in the Kyrgyz Republic complements the World Bank's efforts in private sector development by supporting development of the financial sector and MSMEs growth, and by making selective private sector investments in financial institutions, general manufacturing, mining and agribusiness. IFC is focused in continued strengthening of financial intermediation to MSMEs and developing non-bank financial institutions, especially microfinance companies, and to introduce new financial products and services.  

Since 1996, IFC provided more than US$90 million of its own financing to the financial sector and to companies in mining, agribusiness and real sectors. As of May 1, 2010 IFC's committed portfolio in the Kyrgyz Republic was US$ 34 million including investments in 7 companies. Several new investment projects are currently in the process of preparation.

Additionally, IFC has implemented advisory services projects in the areas of: (i) institutional and capacity building of financial institutions; (ii) leasing and microfinance development; (iii) environment investment climate, and (iv) improving corporate governance in local companies. IFC work in leasing has helped achieve a major breakthrough in advising the Government in passing legislation in May 2008 which creates important tax incentives for leasing.  

During 2010 IFC is planning to continue increasing its operations in the region. Kyrgyz Republic, similar to other IDA countries in the region, is one of IFC's corporate priorities. IFC will continue its advisory services work aimed at implementing the regulatory framework for institutional and capacity building in the financial sectors, developing corporate governance and improving investment climate. In the next two years, IFC is planning to work on corporate governance and microfinance with individual companies and financial institutions on a case-by-case basis.  

In 2009, IFC initiated a new advisory services project focused at improving financial markets infrastructure, specifically credit information sharing systems, financial intermediaries' credit underwriting practices and risk management education. Strengthening financial infrastructure has been identified a key part under IFC's response to financial crisis. Under this strategy IFC is reinforcing its work with credit bureaus which help financial institutions identify risks and safely re-engage in lending activities when the economic cycle permits.

In addition, IFC is preparing an infrastructure advisory program for Central Asia. This initiative will provide advice and assistance to the Kyrgyz Government in designing public private partnerships and, possibly, privatization of infrastructure companies. Infrastructure in the Kyrgyz Republic is in the great need of investments and this constitutes a constraint to economic growth. The Infrastructure Advisory Program could attract external investments to these sectors and increase the capacity of the Government to develop and structure projects on a PPP basis.

In 2008-2009 the IFC investments in Kyrgyz Republic has amounted to US$22.00 million. In 2005-2009 IFC has approved and committed three credits lines for SMEs financing to Kyrgyz Investment Credit Bank (US$11.5 million), two credit lines to Bai-Tushum Microfinance Agency (US$6.2 million), and two projects with Altyn-Ajydar for expansion its corrugated packaging productions and production of construction materials (US$3.0 million) and US$1.5 mm dollars loan to Magic Box printing company. Also, IFC has provided the credit line of US$2.0 million to Kazcommertsbank under the framework of MSEF project, US$5 mm credit line to Demir Kyrgyz International Bank and US$10 mm to ATF Kyrgyzstan Bank under the framework of MSEF project in September 2010. In recent years, IFC has invested in a few regional projects, with benefits to Kyrgyz Republic, including: Central Asia Micro and Small Enterprise Facility, a joint project with EBRD, with total project size of US$153 million.

IFC RECENT INVESTMENT PROJECTS

IFC committed a US$10 million credit line to ATF Kyrgyzstan Bank for micro and small enterprises financing.
IFC committed a US$5 million credit line to KICB for micro and small enterprises financing, and agribusiness companies financing.
IFC provided a US$4 million, coupled with AS, to Micro Credit Agency Bai Tushum Financial Foundation, one of Kyrgyzstan's leading micro lending institutions. 
IFC committed a US$5 mm credit line to Demir Kyrgyz International Bank for MSMEs lending.
 
IFC ACTIVE ADVISORY SERVICES PROJECTS

Investment Climate Advisory Services Project 2009 - present (ww.ifc.org/beekg) 
IFC improves the business climate and helps facilitate the growth of the private sector in Kyrgyz Republic by identifying and removing regulatory barriers to business entry and operations. IFC monitors and assesses the effectiveness of these reforms through surveys of the private sector and increases the legal awareness of entrepreneurs through outreach and advocacy work. Financed by the Government of Switzerland 

Corporate Governance Project 2007 - present (www.ifc.org/cacgp)
IFC is helping local joint stock companies and banks strengthen their corporate governance practices with a view to improving their operations and increasing ability to attract investment and financing.

IFC Azerbaijan-Central Asia Financial Markets Infrastructure Advisory Services Project 2009 - present (www.ifc.org/acafi)
IFC aims to expand secure access to finance for individual consumers and MSMEs by improving the financial infrastructure of and regulatory environment for credit bureaus and by developing a Risk Certification Program. Financed by the Government of Switzerland 

MicroFinance Transformation Project 2008 - present 
IFC is providing advisory services on a selective basis to microfinancial institutions in Azerbaijan and Central Asia to support their transformation processes.

IFC ADVISORY SERVICES PROVIDED 

Microfinance: The Microfinance Law was developed by FINCA and IFC with assistance of IFC's Private Enterprise Partnership and was approved by Legislative Assembly of the Parliament on June 11, 2002. 

Leasing: IFC provided advisory services to develop the legal framework for leasing including a law on leasing and an appropriate tax regime for leasing. Additional activities included a large public awareness campaign on leasing through the local media and training and capacity building for local existing and potential lessees. In 2002 the President of Kyrgyz Republic enacted a law on leasing, and in 2003 the Parliament adopted tax amendments, both which have created the necessary legal foundation for leasing in Kyrgyz Republic. In 2005, IFC has launched the second stage of leasing project. It helped achieve a major breakthrough in advising the Government in passing legislation in May 2008 which creates important tax incentives for leasing. In addition, IFC worked with individual companies (including IFC clients) on developing their internal capacity in leasing and will consider financing for a leasing subsidiary being established by KICB (IFC bank client). The project officially closed in April 2009.

Housing Finance: In 2005 IFC launched a Central Asian Regional Project to improve legal, regulatory and tax framework for housing finance and for creating favorable conditions for housing finance development. In mid 2006 IFC project team has completed regional studies on legal framework and existing obstacles for successful development of housing finance in Central Asia including Kyrgyz Republic. The presentation of the results of studies and subsequent recommendations has been done to the Government in July 2006. In 2007 the IFC project team has started the second stage of the project aimed at providing assistance in improving enabling environment, strengthening institutional capacity of financial organizations involved in housing finance, assisting the Government of KR in improving the housing policy including development of Housing Code, laws and legislation related to housing finance. The project focused on primary mortgage development although the Government also requested support in designing secondary market legislation. The project officially closed in August 2009.  

FIAS: Foreign Investments Advisory Services has received a request to provide implementation assistance to the Government for previous FIAS recommendations. FIAS completed a review on FDI Law in June 2006 and held a joint meeting with representatives of the private sector, government officials and other concerned parties.

Bio Diversity - Snow Leopard Program: In 2005, with IFC support "Bashat" (a NGO) launched an advanced biodiversity program designed to protect the endangered snow leopard and other regional species in the Sary-Chat Ertash Zapovednik - a vast and remote nature reserve neighboring Kumtor mine. 

IFC INTENDS TO CONTINUE

• Promoting micro/small and medium enterprises
• Assisting the agri-business sector
• Strengthening the financial sector
• Development of leasing
• Provision of finances for share capital through share capital funds
• Developing tourism
• Expanding investment in the mining sector
• Assisting privatization opportunities

Statement of IFC's commited and outstanding portfolio as of May 1, 2010 (in million USD) can be downloaded here.