Government Stimulus Plan For Kazakh Businesses

Kazakhstan's small and medium-sized businesses will get 100 billion tenge ($830 million) in loans as the government seeks to foster economic growth in its two biggest cities. State-owned Kazyna will provide 50 billion tenge for lending to businesses in Astana, the capital, and Almaty, Industry Minister Vladimir Shkolnik told a cabinet meeting in Astana today. Another 50 billion tenge will come from commercial banks.

Kazakhstan's $100 billion economy has grown an average 10 percent a year since 2000 as the price of oil surged, sparking a construction boom. The nation's economy expanded 5.4 percent in the first half of 2008, almost half the pace in the same period a year earlier, as banks curtailed lending because of the global tightening of credit. Annual retail sales growth in the first half slowed to 2.1 percent in Kazakhstan, an 81 percent decline from the same period last year.

Kazakh small and medium businesses will get the money at an interest rate of no more than 12.5 percent a year, Shkolnik said. Kazakhstan's central bank cut its benchmark interest rate to 10.5 percent from 11 percent starting July 1 to help ease a credit squeeze.

AO Kazkommertsbank, the country's second-biggest lender, and AO Halyk Savings Bank declined to participate in the government program. Almaty-based businesses got 302.9 billion tenge in the first half from commercial banks, a slump of 44.3 percent from a year earlier. Tax payments by Almaty-based small and medium-sized companies fell by 13.6 percent in the first seven months to 248.9 billion tenge, the office said.