OREANDA-NEWS. June 16, 2011. The European Bank for Reconstruction and Development (EBRD) is helping the financial sector in Tajikistan with a 13.6 million Tajik somoni loan (USD 3 million equivalent) to Micro-lending Organisation Imon International to provide more affordable somoni loans to small businesses.

With its first local currency loan in Tajikistan, the Bank launches in that country the EBRD’s new Local Currency Lending Programme in Early Transition Countries (ETC)*, which aims to support private sector development by ensuring the Tajik borrowers, including local enterprises, banks and microfinance organisations, avoid taking on exchange rate risks. Tajikistan is the first country to benefit from this new Programme in Central Asia.

With this 4-year senior loan, the EBRD is increasing the availability of local currency lending to entrepreneurs in Tajikistan. The EBRD’s funds will help Imon in expanding its lending portfolio, especially in the country’s remote rural areas.

The new loan to Imon – the largest micro-finance provider in the country with share of about 40 per cent of the Tajik market – is being disbursed in line with a Memorandum of Understanding signed in April this year between the EBRD and Tajik government.  
The Tajik authorities confirmed their intention to implement reforms aimed at reducing dollarisation and strengthening the country’s capacity to intermediate savings and investments through the use of local currency – the Tajik somoni.

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

Imon International has been cooperating with the EBRD since 2005. It was the first micro-finance institution to receive a loan from the EBRD in the region.

“Our new local currency loans provided with the EBRD’s support will create new development opportunities for farmers, rural residents and women-entrepreneurs. We will be able to open new client service centres in the country’s remote regions,” said Imon’s Deputy Chief Executive Officer Gulbakhor Makhkamova, speaking at the loan signing ceremony.

The Local Currency Lending Programme for Tajikistan forms part of a targeted local currency risk-sharing programme for the Early Transition Countries (ETC), supported by the EBRD and international donor countries to catalyse local currency lending.

In Tajikistan, the EBRD focuses on promoting small private businesses, developing the banking sector and improving critical infrastructure. The Bank is also supporting the development of the agricultural sector, with a special emphasis on providing loans to farmers. In 2010 the EBRD’s investments amounted to a total of Ђ21.6 million (USD 29 million).

To date, the EBRD has committed over Ђ214 million (USD 309 million) in various sectors of the Tajik economy, mobilising additional investments of about  Ђ278 million (USD 401 million).

* The EBRD’s Early Transition Countries Initiative aims to stimulate economic activity in the Bank’s countries which still face the most significant transition challenges: Armenia, Azerbaijan, Belarus, Georgia, Moldova, Mongolia, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan.