Under project KGZ-1037, the Islamic Development Bank will channel $44.6 million to state banks of Kyrgyzstan. These funds are intended to support the mechanization of agriculture and will allow individuals and entrepreneurs to purchase modern agricultural machinery and equipment.
Preferential Lending Terms for Farmers
Financing will be provided through the Islamic windows of state banks. The main parameters set for these programs include the following terms:
Key Lending Parameters
The programs are implemented on the basis of Murabaha (sale with a mark-up payable in installments) and Ijara Muntahia Bittamleek (lease with subsequent purchase) products. This cooperation is aimed at supporting the real sector of the economy and accelerating the technical re-equipment of farms.
How This Will Affect Farmers
Attracting these preferential funds will expand the lending capacity of the banking sector and, importantly for farmers, reduce the financial burden through the long-term nature of the financing.
The project agreement was signed by the Ministry of Water Resources, Agriculture and Processing Industry of the Kyrgyz Republic together with the Ministry of Finance and ABank OJSC and Eldik Bank OJSC.
