A GREAT LEAP

Kazakhstan 2015 | FINANCE | INTERVIEW

TBY talks to Bolat Zhamishev, Chairman of the Board of the Development Bank of Kazakhstan, on Nurly Zhol, the role of non-energy investment in the new economic policies, and collaborating with international financial institutions.

Bolat Zhamishev
BIOGRAPHY
Bolat Zhamishev earned a PhD in economics and has held numerous government, managerial, and board positions throughout his career. Among these he served as Deputy Chairman of the Board of the Government, Managing Director on project activity of the Eurasian Development Bank, Finance Minister in the Republic of Kazakhstan, and Regional Development Minister of the Republic of Kazakhstan. He has participated in governing bodies of organizations in ways such as membership on the Board of Directors of the National Welfare Fund Samruk-Kazyna, and has served as The Republic of Kazakhstan Government Representative in the Management of the National Bank of the Republic of Kazakhstan. Zhamishev has also garnered honorary titles, and published more than 40 scientific publications.

How does DBK support the new economical policy “Nurly Zhol" in terms of investments into projects that have no connection to natural resources?

The Bank acts as chief financial operator for the crisis response measure policy “Nurly Zhol" when it comes to long-term credit provision for large industrial projects from the National Fund. The whole financing volume directed at the economy through DBK with this program is comprised of 185 billion tenge, or around $1 billion. Of this amount, 50 billion tenge was allocated at the end of 2014, and another 120 billion tenge are allocated for 2015, with 15 billion for 2016. Subsidized credit resources are allocated for projects in the processing industry, support for automotive, helicopter, and passenger transport manufacturers in Kazakhstan, as well as stimulation for export of added-value goods from the country. The main instruments of business support on behalf of DBK are credit loans, leasing, and conditional interbank financing. Credit conditions are very comfortable for the recipients, because the credits are provided in the national currency, tenge, at the nominal value not exceeding 7% per annum.

What financial instruments does DBK employ in order to attract investments and production into Kazakhstan?

DBK has to respond to the requirements and demands of our credit borrowers. There is a growing demand for credit in domestic currency. The bank is actively working in this direction. Last year, we borrowed 20 billion tenge from the Integrated Accumulative Pension Fund, and 24 billion tenge in the form of deposits at “Bayterek" Holding. This issue allows the bank to utilize up to 100 billion tenge on the internal market. A new instrument for DBK will be a long-term—up to 10 years—dollar to tenge currency SWAP from the National Bank of Kazakhstan amounting to 60 billion tenge. Moreover, as financial operator of several government programs, the bank can count on the government of Kazakhstan as its final shareholder in the program of attracting tenge resources. And indeed, we received such support in the form of 185 billion tenge allocated to the “Nurly Zhol" program, DBK also received 75 billion tenge from the National Fund towards several projects as part of the second 5-year plan for industrialization. DBK has always actively borrowed money from external capital markets. In particular, the Bank has issued several issues of eurobonds amounting to $2 billion. As the foremost among the banks in the CIS region, DBK entered the Islamic financial market in 2012 with a deal for 240 million Malay ringgit.

Can you talk about common projects between DBK and international financial organizations?

The DBK is constantly collaborating with various international financial organizations, and has held negotiations with EBRD, ADB, World Bank, and the International Finance Corporation about the possibilities of co-financing projects in Kazakhstan. With EBRD, the Bank has signed a Memorandum on the principles of cooperation. We are hoping that these meetings will eventually allow us to reach certain agreements.

What projects does DBK finance within the Program for Industrial Development in 2015-2019?

The Bank has created a portfolio of all potential projects. For 2015-2016 only, the portfolio includes eleven projects for over 180 billion tenge in loans credits. These are just indicative numbers that may change in the future. We are mainly looking into large projects, primarily in the processing industry, that correspond to the credit memorandum of the Bank. The value of the project must not be lower than 30 million dollars, while for food production projects this number is 10 million dollars. We have already started crediting the project «Altel» that aims to expand the LTE network, costing around 105 billion tenge, of which 35% of funding is provided by the Development Bank.