It is worth reminding that the Development Bank of Kazakhstan is one of the operators of the Nurly Zhol State Program, implemented since 2015, in terms of supporting Kazakhstani non-resource exports. This year, the program that is designed for 5 years, completes its operation in the current format (in March this year, the Ministry of Industry and Infrastructure Development of Kazakhstan announced the extension of this program until 2025). And the Development Bank's support for exporters has become one of its most efficient instruments.
The revenue of enterprises from the sale of products in foreign markets and received funding from the DBK for the development of the export direction amounted to KZT 552.5 billion."- said Abay Sarkulov, the Chairman of the Management Board of the Development Bank of Kazakhstan - From 2015 by this day, the Bank, in support of exporters under the Nurly Zhol program, has provided export financing to 17 domestic enterprises, for instance well-known companies such as Kentau Transformer Plant, RG Brands Kazakhstan, Maslodel, Molprodukt, Shymkentmay, Kainar-AKB, Sei-Nar LLP, Bayan Sulu, Kazzinc, Kazphosphate, KazAzot",
The Bank supports private sector export initiatives in such strategic sectors of Kazakhstani economy as metallurgy, mechanical engineering, food and chemical industries. Enterprises that have received export operations financing from DBK export pipes, long steel, copper, bar silver, alumina, transformers, car batteries, vegetable oil, dairy products and confectionery, as well as sodium cyanide, yellow phosphorus, sodium tripolyphosphate and ammophos. And this cooperation through the development institution is really mutually beneficial for the state and business.
Thus, in the first nine months of 2019, within the framework of pre-export operations supported by the Development Bank, the export of finished products in the amount of KZT 107.7 billion was carried out with the relevant development of borrowed funds in the amount of KZT 77.6 billion. That is, by supporting the exporter, the state received not only a return on investment but also the inflow of funds in the country, the volume of which is almost one-and-a-half times the size of investments in export support. At last year-end, for example, in the drawdown of loans for KZT 87.3 billion, the Bank-financed enterprises exported their products in the amount of KZT 116.7 billion.
Thus, the DBK becomes a direct participant in the development of the production sector of the Republic, focused not only on domestic but also on foreign markets. The high ratings of the largest development institution of Kazakhstan (the credit rating of DBK from Moody's corresponds to the sovereign rating of the Republic of Kazakhstan, the credit ratings from Standard&Poor's and Fitch Ratings are only 1 point below the sovereign) allows the Bank to attract borrowed funds for the implementation of its programs - including export lending - conveniently and on fairly favorable terms.
It is worth reminding that in order to support non-resource exports under the Nurly Zhol program, the Bank raised KZT 95 billion of long-term credit resources from 2015 to the present, including KZT 65 billion of borrowings from the National Fund. For additional financing of export operations, by issuing bonds, the Bank attracted KZT 30 billion from the Unified Accumulative Pension Fund. As a result, as of December 1 present year, taking into account the renewable credit lines, the Bank allocated KZT 420 billion for export financing of Kazakhstani companies, where the financing of exporters amounted to KZT 104 billion since the beginning of the year.
The ratings of Development Bank of Kazakhstan JSC are among the highest of the companies in the quasi-sovereign and banking sectors of Kazakhstan, and therefore Kazakhstani exporters could hardly find a more effective partner for organizing the supply of their goods to Russia, Uzbekistan, Turkmenistan, Afghanistan, Tajikistan, Kyrgyzstan, China, the USA, South America, Azerbaijan, Switzerland, Slovakia, Serbia, Belarus, Estonia, and this is a non-exhaustive geographical list of Kazakhstani exports established with the help of the Bank.
At the same time, the Bank supports the export of not only goods but also works and services. In December last year, it became known that the Development Bank provided Bank guarantees in the amount of up to $37.8 million or a period of up to 2 years and 11 months in relation to the services of the Kazakhstani engineering company AAEngineering Group LLP for the construction of a gold processing plant at the Dzheruy deposit in Kyrgyzstan. The DBK guarantee applies to the fulfillment of the obligations of AAEngineering Group to the customer for the construction of the factory with infrastructure facilities and tailings, as well as to the refund of the advance payment made by the customer in case of non-fulfillment of the above obligations.
This was the first transaction of this kind not only for the Bank itself, but also in the history of Kazakhstan: financial institutions of the country have not yet guaranteed the fulfillment of obligations of Kazakh contractors for the construction of large manufacturing facilities abroad. And the experience of cooperation with AAEngineering Group LLP, which implements turnkey projects in the mining industry (from concept formulation to launch and operation of mining operations), may be scaled by the Development Bank in the future - provided that Kazakhstani exporters have the work and services of developed projects abroad, of course.
At the same time, the Development Bank is constantly working to ensure that its programs to support the domestic business are as convenient as possible for its customers: thus, this year the Bank reduced the terms of consideration of pre-export financing for domestic exporters by 30 working days, eliminating the stage of Preliminary analysis. DBK also intends to expand the range of instruments for financial support of domestic exports by developing a mechanism to provide export credits to non-resident importers in US Dollars at a competitive interest rate and a mechanism to provide export credits by bond retirement at the AIFC and KASE.
Before that, the Development Bank of Kazakhstan in August last year reduced the rate of pre-export financing to no more than 8% per annum, and the export and pre-export financing itself is supposed to be secured by export contracts, with the minimum loan amount to be 1 billion tenge. At the same time, within the framework of lending to export operations, DBK can also finance the importer of Kazakh products in different currencies with the involvement of the insurance coverage structure of the Kazakh Export organization. The "threshold" for crediting such operations is 1 billion tenge, the loan period depends on the conditions of the export operation. All these new developments make loans within the framework of the program as convenient and attractive as possible for the producer of export-oriented products, and the geography and volumes of Kazakhstan's exports, thanks to such approaches, will be increased in the next five-year period of Nurly Zhol State Program.
