Azernews.Az

By Aynur Jafarova

The European Bank for Reconstruction and Development (EBRD) has allocated a loan worth $12 million to Kyrgyzstan.

The second syndicated loan was made to Kompanion Financial Group, one of the largest microfinance institutions in Kyrgyzstan and a long-standing client of the EBRD, the bank reported on December 16.

The proceeds of the syndicated loan will allow Kompanion to expand its lending operations to micro, small and medium-sized enterprises (MSMEs), especially in rural areas.

It will also reduce Kompanion's exposure to the risk of sharp fluctuations in foreign currency exchange rates. This risk is particularly relevant to microfinance institutions (MFIs). In the past, MFIs have received only foreign currency funding, and their opportunities for hedging have been constrained.

Larisa Manastirli, the Head of the EBRD office in Kyrgyzstan, said the allocation of loan is aimed at to provide access for Kyrgyz businesses to local currency financing to avoid foreign currency exchange risk.

"Kompanion has a well-established network and good country coverage. These will be used to channel financing to more beneficiaries across the Kyrgyz Republic to support growth of the country's economy," she said.

Kompanion CEO Ulanbek Termechikov said as a microfinance institution focused on community development, Kompanion is pleased to have this opportunity to expand access to funding for rural micro entrepreneurs, who are mainly engaged in agricultural production throughout Kyrgyzstan.

To date the EBRD has invested 456 million euros across 105 projects in Kyrgyzstan.