AKIPRESS.COM - The World Bank’s Board of Executive Directors approved today $50 million in Additional Financing for the Emergency Support for Micro, Small and Medium Enterprises Project for the Kyrgyz Republic, World Bank said.

This Additional Financing complements the original $50 million Emergency Support for Micro, Small and Medium Enterprises (MSMEs) Project that was approved on July 30, 2020, and became effective on March 31, 2021. The original project also received $50 million in co-financing from the Asian Infrastructure Investment Bank (AIIB).

“Micro, small and medium enterprises contribute 42 percent of Kyrgyz Republic’s GDP and play a key role in job creation and poverty reduction: therefore, the World Bank welcomes the anti-crisis steps taken by the Government to support them,” says Naveed Hassan Naqvi, World Bank Country Manager for the Kyrgyz Republic. “Many of the country’s businesses have experienced severe shocks associated with the COVID-19 crisis and are now facing newly emerging challenges and uncertainties. We expect that the combined investments of $150 million as part of this project will help scale up and expand the much-needed support to ensure sustainability of businesses and jobs.”

The combined investments under the Emergency Support for Micro, Small and Medium Enterprises Project will provide emergency financial relief and recovery support to more than 60,000 MSMEs through Reimbursable Financial Assistance to eligible enterprises to cover investment needs and operational expenses in order to: prevent business closures; preserve private sector employment; resume and expand operations during recovery from the COVID-19 crisis; and accelerate economic recovery.

Furthermore, the project will support credit provision to MSMEs through a Portfolio Risk Sharing Facility (PRSF), which offers portfolio-based particle credit guarantees. The PRSF reduces the risk of financial sector withdrawal from lending to MSMEs when access to finance is one of the biggest constraints for MSMEs during the recovery.

The Emergency Support for Micro, Small and Medium Enterprises Project and its Additional Financing Project will be implemented through June 2027 by the Ministry of Finance of the Kyrgyz Republic, in compliance with relevant World Bank procedures and standards, including procurement and financial management regulations and anti-corruption guidelines.

The World Bank supports the Kyrgyz Republic through the International Development Association (IDA) and allocates half of the funding in the form of grants, which require no repayment, while the other half is a credit with a 0.75% administrative fee, the repayments of which are spread out over 38 years, with a six-year grace period.

The World Bank’s overall mission in the Kyrgyz Republic is to reduce poverty and promote economic growth and shared prosperity. The Bank’s financial assistance to the Kyrgyz Republic since 1992 amounts to $ 2.2 billion in the form of grants and highly concessional credits.