US$ 4 million for local currency micro loans in Tajikistan

DUSHANBE, December 21, 2011, Asia-Plus – The European Bank for Development and Reconstruction (EBRD) has opened opens credit line to First MicroFinance Bank Tajikistan (FMFB-T) for on-lending in somoni to small businesses

Press release issued by the EBRD on December 20 says the EBRD is continuing to support small and medium-sized businesses in Tajikistan with a multi-currency lending facility of up to US$ 4 million (equivalent) to the FMFB-T.  The facility will allow for diversification of the bank’s funding base and provide more somoni loans to small businesses.

The First MicroFinance Bank is the first dedicated microfinance bank in Tajikistan.  Its mission is to assist rural communities to develop small businesses.  It has one of the broadest outreaches in rural areas and operates in the Rasht Valley and Gorno-Badakhshan Autonomous Region (Gorno Badakhshan or GBAO), parts of the country where the presence of other financial intermediaries is limited.

The First MicroFinance Bank is the fourth financial institution in Tajikistan to have joined the EBRD’s new Local Currency Lending Program in Early Transition Countries (ETC), as part of its drive to reduce the risks – exposed by the economic crisis – of depending excessively on foreign currency funding.

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.

Launched in 2011, the Local Currency Lending Program allows the EBRD to support private sector development by extending local currency-denominated loans to eligible banks, microfinance organisations and private enterprises, to help them avoid taking on exchange rate risks.  Tajikistan was the first country to benefit from this new program in Central Asia.

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.

To date, the EBRD has committed over US$ 319 million in various sectors of the Tajik economy.