Farmers in Kyrgyzstan will gain access to purchasing agricultural equipment based on Islamic financing principles following a three-party agency agreement. The agreement was signed between the Ministry of Water Resources, Agriculture and Food Industry, the Ministry of Finance of Kyrgyzstan, Agibank JSC, and Eldik Bank JSC.
Key Details of the Financing Project
The Islamic Development Bank (IsDB) will provide financing amounting to $44.61 million to the two state commercial banks as part of a project supporting agricultural mechanization in Kyrgyzstan, under the KGZ-1037 project.
Financing Parameters
Support for the Real Sector
This preferential financing is designed to expand the capabilities of the two state banks in supporting agricultural enterprises and farming households. Entrepreneurs and individuals will be able to acquire modern agricultural machinery and equipment using Islamic financial products, specifically 'Murabaha' and 'Ijarah Muntahiyah bit Tamlik'.
The collaboration between the Islamic Development Bank and the country's major state banks is intended to support the real sector economy, foster entrepreneurship, and strengthen the nation's agrarian potential, according to the Ministry of Agriculture.
Financing Scope
- Total Volume: $44.61 million USD
- Recipients: Subjects of entrepreneurship and individuals of the Kyrgyz Republic
- Purpose: Acquisition of agricultural machinery and equipment
- Financing Principles: Islamic financial products 'Murabaha' and 'Ijarah Muntahiyah bit Tamlik'
- Annual Yield Rate: 6%
- Financing Term: Up to 7 years
The project will be implemented through the Islamic windows of Agibank JSC and Eldik Bank JSC.
