The local currency portion of the loan is provided under the EBRD’s new Local Currency Lending Programme in early transition countries (ETC), which aims to support private sector development by ensuring the Kyrgyz borrowers, including local enterprises, banks and microfinance organisations, avoid taking on currency exchange risks.

The loan was arranged under the EBRD's MSME Credit Line, consisting of two tranches of US$ 10 million each, which provides a much-needed and sizeable investment in the sector.

The country, which has just held presidential elections, is still recovering from the turmoil of events between April and June last year. At present, Kyrgyz businesses – especially small sized ones - have poor access to finance.

“With this new investment the EBRD is contributing to private business sector development in Kyrgyz Republic. Crucially, the customers of UniCredit Bank will get better services and easier access to much-needed cash for further development of Kyrgyz entrepreneurship. The local currency component of the loan is a key element in the financing, as we want Kyrgyz borrowers without adequate foreign currency revenues to avoid facing exchange rate risk,” said Jyldyz Galieva, Acting Head of the EBRD Resident Office in Bishkek.

According to the Regional Economic Prospects from the EBRD, published in October 2011, the economy of the Kyrgyz Republic is expected to grow by about 6 per cent in 2011, after a recession last year. However, as the global situation deteriorates, the growth is expected to slow down in 2012.

The EBRD's main priorities in the Kyrgyz Republic are to foster the private sector, strengthen the financial sector and support critical infrastructure.

To date, the EBRD has committed about US$ 470 million in various sectors of the Kyrgyz economy, mobilising additional investments from other sources of financing of about US$ 680 million in about 80 projects.