On the ratification of the Loan Agreement (Fiscal Management and Financial Sector Reform Program – Subprogram 1) between the Republic of Kazakhstan and the Asian Infrastructure Investment Bank

Home / RLA / On the ratification of the Loan Agreement (Fiscal Management and Financial Sector Reform Program – Subprogram 1) between the Republic of Kazakhstan and the Asian Infrastructure Investment Bank

The Law of the Republic of Kazakhstan dated December 18, 2024 No. 145-VIII SAM.

To ratify the Loan Agreement (Fiscal Management and Financial Sector Reform Program – Subprogram 1) between the Republic of Kazakhstan and the Asian Infrastructure Investment Bank, signed in Astana on August 21, 2024.

President of the Republic of Kazakhstan

K. TOKAEV

Unofficial translation

LOAN NUMBER L0789A

Loan Agreements (Fiscal Management and Financial Sector Reform Program - Subprogram 1) between the Republic of Kazakhstan and the Asian Infrastructure Investment Bank

The Agreement dated August 21, 2024 (hereinafter referred to as the Loan Agreement) between the Republic of Kazakhstan (hereinafter referred to as the Borrower) and the Asian Infrastructure Investment Bank (hereinafter referred to as the Bank, AIIB).

Considering that:

A. The Bank received a development policy letter from the Borrower dated November 20, 2023 (hereinafter referred to as the Development Policy Letter), which sets out certain tasks and policy actions aimed at developing the Borrower's financial sector, as described in Appendix 1 to this Loan Agreement (hereinafter referred to as the Program);

B. The borrower applied to the Bank with a request for a loan for the purposes of the Program;

C. Policy-based financing provides overall budgetary support to the Borrower, and thus the Program funds are not intended to finance any specific expenditure in any particular area of the Borrower; and

D. The Bank has agreed, in particular on the basis of the above, to provide a Loan to the Borrower on the terms and conditions set forth in this Loan Agreement.

Thus, the Borrower and the Bank hereby agree on the following:

ARTICLE I - GENERAL CONDITIONS; DEFINITIONS

1.01. The General Terms and Conditions (as defined in the appendix to this Loan Agreement) are an integral part of this Loan Agreement.

1.02. Unless the context otherwise requires, the terms used in this Loan Agreement starting with capital letters have the meanings assigned to them in the general terms and conditions or the addendum to this Loan Agreement.

ARTICLE II - LOAN

2.01. The Bank agrees to provide the Borrower with a loan on the terms set forth or mentioned in this Loan Agreement in the amount of fifty-two billion seven hundred and forty million yen (JPY 52,740,000,000) (hereinafter referred to as the Loan) to facilitate the financing of the Program.

2.02. The Borrower has the right to withdraw the Loan funds in accordance with section III of Appendix 2 to this Loan Agreement.

2.03. The one-time commission payable by the Borrower is one quarter of one percent (0.25%) of the Loan amount. The borrower must pay a one-time fee no later than 60 days after the effective date.

2.04. The reservation fee payable by the Borrower is one quarter of one percent (0.25%) per annum of the unused Loan balance.

2.05. The interest paid by the Borrower for each interest period is the base rate plus the variable spread or the rate that can be applied after the conversion of the interest rate.

2.06. The payment dates are June 1 and December 1 of each year.

2.07. The principal amount of the Loan is repayable in accordance with the provisions of Annex 3 to this Loan Agreement.

ARTICLE III - THE PROGRAM

3.01. The Borrower declares his commitment to the objectives of the Program. To this end, the Borrower implements the Program through the Executive Agency for the Program and the implementing agencies for the Program in accordance with the provisions of article V of the general terms and conditions.

3.02. Not limited to the provisions of Section 3.01 of this Loan Agreement, and unless otherwise agreed between the Borrower and the Bank, the Borrower must ensure the implementation of the Program in accordance with the provisions of Annex 2 to this Loan Agreement.

ARTICLE IV - ENTRY INTO FORCE

4.01. The deadline for the entry into force of this Loan Agreement is the date following the expiration of ninety (90) days after the date of signing this Loan Agreement.

ARTICLE V - REPRESENTATIVE; ADDRESSES

5.01. The representative of the Borrower authorized for the purposes of Section 10.02 of the General Terms and Conditions is the Minister of Finance of the Republic of Kazakhstan.

5.02. The Borrower's address for the purposes of Section 10.01. general terms and Conditions:

Ministry of Finance of the Republic of Kazakhstan

Republic of Kazakhstan

Astana, 010000

Mangilik El Avenue, 8

Fax:+7-7172-75-03-52

5.03. Bank Address:

Asian Infrastructure Investment Bank

Tower A, Building 1, East Tianchen Road No. 1

Chaoyang District, Beijing, 100101 China

Fax:+86-10-8358-0002

AGREED as of the day and year indicated above.

REPUBLIC OF KAZAKHSTAN

Whom: ___________________________

Authorized representative

Full name.: ___________________________

Post:________________________

ASIAN BANK

INFRASTRUCTURE INVESTMENTS

Whom: _______________________________

Authorized representative

Name: _______________________________

Post:__________________________

APPENDIX 1

Program Description

The main objective of the Program is to reduce macroeconomic and financial vulnerability to external shocks.

The Program includes (a) increasing fiscal sustainability, improving organization, transparency, and governance principles; and (b) supporting the development of the banking sector and capital markets.

The program is described in more detail in the letter of the Development Policy and the MMR.

The program is considered completed as of September 30, 2023.

APPENDIX 2

Program Execution

Section I. Implementation mechanisms

A. Institutional arrangements

1. The Program's Executive Agency is responsible for the overall implementation of the Program, including monitoring and reporting.

2. The Borrower, through the implementing agencies under the Program, is responsible for carrying out day-to-day activities under the Program.

B. Political dialogue

1. The Borrower, through the Executive Agency for the Program and the implementing agencies for the Program, must ensure that all policy actions taken under the Program, as specified in the MMR, continue to operate.

2. The Borrower, through the Executive Agency for the Program and the implementing agencies for the Program, should inform the Bank about policy discussions with other multilateral and bilateral aid agencies that may have implications for the implementation of the Program, and provide the Bank with the opportunity to comment on all policy proposals arising from them. The Borrower, through the Executive Agency for the Program and the implementing agencies for the Program, will take into account the Bank's point of view before finalizing the development and implementation of any such proposal.

C. Using partner financing

The Borrower ensures the use of partner financing to finance the implementation of certain programs and activities that correspond to the objectives of the Program.

D. Prohibited practices

The Borrower, the Executive Agency of the Program, and each of the implementing agencies of the Program must (a) comply with the AIIB's policy on prohibited practices and recognize that the AIIB reserves the right to investigate, directly or through its agents, any alleged prohibited activities related to the Program; and (b) will cooperate with any such investigation and provide provide all necessary assistance for the satisfactory completion of such an investigation.

Section II. Monitoring reporting and evaluation of the Program

But. Program reports

According to section 5.08(c) of the general Terms and Conditions, the completion report must be submitted to the Bank no later than six months after the closing date. The completion report should assess the status of the implementation of the Program and the achievement of its expected results based on the indicators of the MMR.

Section III. Withdrawal of loan funds

A. General provisions

1. The Borrower may withdraw the Loan funds in accordance with the provisions of Article II of the general terms and conditions of this section and those additional instructions that the Bank specifies in the notification to the Borrower.

2. Distribution of loan amounts. The loan is allocated in the form of a one-time tranche, the funds of which the Borrower can withdraw from the Loan account.

The distribution of Loan amounts for these purposes is shown in the table below.:

Distribution

The amount of the allocated Loan (expressed in yen)

One-time tranche

52 740 000 000

TOTAL AMOUNT

52 740 000 000

B. Withdrawal conditions; withdrawal period

1. No withdrawals are made regardless of the provisions of Part A of this section.:

a) until the Bank receives full payment of the one-time fee; and

b) if the Borrower, to the satisfaction of the Bank, has not carried out political actions to release borrowed funds, and these political actions continue to operate.

2. Except in cases where otherwise agreed with the Bank:

(a) all funds withdrawn from the Loan account must be transferred by the Bank to a deposit account designated by the Borrower and acceptable to the Bank.

(b) The Borrower must ensure that each time the Loan amount is deposited into the escrow account, the equivalent amount is recorded in the Borrower's budget management system in a manner acceptable to the Bank.

3. No Loan funds may be withdrawn to finance the items specified in Appendix 1 to this Annex 2.

4. For the purposes of section 2.05(c) of the general terms and conditions, the closing date is December 31, 2024.

C. Financial statements; audits

1. The Borrower is required to maintain or ensure that separate statements and documentation on the deposit account are maintained in accordance with consistently applied accounting standards acceptable to the Bank, and in an appropriate manner to reflect the statements and documentation of the deposit account.

2. At the request of the Bank, the Borrower must audit the financial statements by independent auditors, whose qualifications, experience and terms of reference are acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank. The Borrower must provide the Bank with the financial statements and the auditors' report in English immediately after their preparation, but in any case no later than six (6) months from the date of the Bank's request.

Appendix 1 to Appendix 2

List of exceptions

No withdrawal of Loan funds will be made in respect of the following:

(i) expenses related to goods included in the following groups or subgroups of the United Nations Standard Classification of International Trade, vol. 3 (CMT, ed. 3), or any group or subgroup provided for by further amendments to the CMT, as indicated in the Bank's notification to the Borrower.:

Table. Unauthorized articles

Chapter

Heading

Description of articles

112

Alcoholic beverages

121

Unprocessed tobacco; tobacco production waste

122

Processed tobacco (containing or not containing tobacco substitutes)

525

Radioactive and related materials

667

Pearls, precious and semi-precious stones, whether or not worked

718

718.7

Nuclear reactors and their components; non-radiating fuel cells (cartridges) for nuclear reactors

728

728.43

Tobacco preparation or processing equipment

897

897.3

Jewelry made of metals of the gold, silver or platinum group (excluding wristwatches and watch cases) and gold or silver products (including precious stones)

971

Gold, non-monetary (except for gold ores and concentrates)

Source: United Nations

(ii) the costs of goods supplied under the contract, which will be financed by any national or international financial institution or agency that agrees to finance, including any contracts financed under a loan or grants from the Bank;

(iii) expenses for goods intended for military or paramilitary purposes or for the purchase of luxury goods;

(i?) drug expenses;

(?) expenses for environmentally hazardous goods, the production, use or import of which is prohibited by the Borrower's legislation or international agreements to which the Borrower is a party; and

(?(i) Expenses related to payments prohibited by the Borrower in accordance with a decision of the United Nations Security Council adopted in accordance with Chapter VII of the Charter of the United Nations.

APPENDIX 3

Repayment schedule

1. The following table shows the repayment dates of the principal debt of the Loan and the percentage of the total principal amount of the Loan payable on each repayment date of the principal debt (hereinafter referred to as the Repayment Share). If the Loan funds are fully disbursed on the first repayment date of the principal debt, the principal amount of the Loan payable by the Borrower on each repayment date of the principal debt will be determined by the Bank by multiplying: (a) the Loan amount withdrawn on the first repayment date of the principal debt; (b) the Repayment Share on each repayment date of the principal debt.

Payment date

Payment percentage

June 1, 2027

December 1, 2027

June 1, 2028

December 1, 2028

June 1, 2029

December 1, 2029

June 1, 2030

December 1, 2030

June 1, 2031

December 1, 2031

June 1, 2032

December 1, 2032

June 1, 2033

December 1, 2033

June 1, 2034

December 1, 2034

June 1, 2035

December 1, 2035

June 1, 2036

December 1, 2036

June 1, 2037

December 1, 2037

June 1, 2038

December 1, 2038

Total

100%

2. If the Loan funds are not fully withdrawn as of the first repayment date of the principal debt, then the principal amount of the Loan to be repaid by the Borrower on each repayment date of the principal debt is determined as follows:

(a) to the extent that any Loan funds have been withdrawn on the first repayment date of the principal debt, the Borrower must repay the Loan amount withdrawn on that date in accordance with paragraph 1 of this annex;

(b) any amounts withdrawn after the first repayment date of the principal debt must be repaid on each repayment date of the principal debt after the date of such withdrawal in amounts determined by the Bank by multiplying the amount of each such withdrawal by a fraction, the numerator of which is the initial amount of the Repayment Share specified in the table in paragraph 1 of this annex for that repayment date. debt, and the denominator of which is the sum of all remaining initial amounts of the Repayment Share of payments on the repayment dates of the principal debt on or after such date.

3. (a) Loan amounts withdrawn during the two calendar months preceding any repayment date of the principal debt, solely for the purpose of calculating the amounts of the principal debt payable on any repayment date, will be considered withdrawn and outstanding on the second repayment date of the principal debt following the withdrawal date, and will be repayable. for each repayment date of the principal debt, starting from the second repayment date of the principal debt following the withdrawal date;

(b) Notwithstanding the provisions of subparagraph (a) of this paragraph, if at any time the Bank applies a billing system based on payment dates, in which invoices are issued on or after the relevant principal repayment date, the provisions of this subparagraph shall no longer apply to any withdrawals after the implementation of such billing system.

addition

Section I Definitions

1. ADB means the Asian Development Bank.

2. Borrower means recipient, a term defined in the general terms and conditions.

3. Unforeseen expenses mean:

(a) the amount (if any) for which:

(i) the interest that the Bank was required to receive in accordance with the terms of this Agreement for the period from the date of receipt of all or any part of the principal amount of the Loan or the unpaid amount until the last day of the current interest period in respect of that Loan or the unpaid amount, where the principal amount or the unpaid amount was paid on the scheduled repayment dates;

exceeds:

(ii) the amount of interest that the Bank would have been able to receive by depositing an amount equal to the principal amount or unpaid amount it received with a leading bank in the relevant interbank market for the period beginning on the business day following receipt or refund and ending on the last day of the current interest period; and

(b) any losses, premiums, penalties, obligations or expenses incurred in the liquidation or use of deposits or borrowings from third parties for the purpose of providing, servicing or financing all or any part of this Loan;

(c) any losses, costs, expenses incurred by the Bank as a result of termination, liquidation or modification of any financing mechanisms.

4. Partnership financing means funds in local currency received from the Loan funds under the Program.

5. Deposit Account means the deposit account specified by the Borrower and agreed upon by the Bank, to which funds withdrawn from the Loan account are credited, as specified in section III. B.2. of Appendix 2.

6. General Terms and Conditions means the general terms and conditions of the Asian Infrastructure Investment Bank for sovereign Loans dated October 22, 2021, as amended in section II of this annex.

7. A financing agreement in yen means a financial transaction or agreement in connection with the financing of a Loan.

8. The repayment dates of the financing in yen means the expiration dates of the financing agreements in yen related to the Loan.

9. The Executive Agency for the Program means the Ministry of Finance of the Borrower or any of its legal successors acceptable to the AIIB, which is responsible for the implementation of the Program.

10. Implementing agencies under the Program include the Ministry of National Economy, the Agency for Regulation and Development of the Financial Market, the Agency for Financial Monitoring, and the Borrower's National Bank or any of its legal successors acceptable to the AIIB, which are responsible for the day-to-day implementation of the Program.

11. Development Policy Letter means the development policy letter referred to in paragraph (A) of this Loan Agreement.

12. MMR means the development of a policy and monitoring mechanism that integrates both a development and monitoring mechanism and a policy matrix, and that outlines policy actions agreed upon by the Borrower and ADB.

13. MMR indicators mean indicators within the framework of the development of the policy and monitoring mechanism of the Program, agreed upon by the Borrower and the Bank.

14. Policy Actions means policy actions agreed upon by the Borrower and ADB, performed or planned to be performed by the Borrower under the Program, as specified in the GMM.

15. The Prohibited Practices Policy means the Bank's Prohibited Practices Policy dated December 8, 2016, as amended from time to time.

Section II. Amendments to the general terms and conditions

The following changes have been made to the general terms and conditions:

1. In cases where the term "Project" is used in general terms, this term should be replaced by the term "Program".

2. Section 5.01. "General principles of project execution as a whole" has been changed to: "Section 5.01. General principles of project execution. The Borrower must ensure that the Program is implemented: (i) with due vigilance and efficiency and in accordance with sound administrative, financial, public policies, social and management practices; and (ii) in accordance with the provisions of the Loan Agreement."

3. Section 5.09. "Financial management; Financial reporting; Audit" is excluded.

4. The definition of the base rate in the appendix to the general terms and conditions should be changed and reformulated completely as follows:

The base rate for any interest period means:

(a) (i) for the US dollar - compound SOFR; (ii) for the euro - EURIBOR; and (iii) for the Japanese yen - TONA; provided that if the relevant base rate is not available from conventional sources of information at the usual publication time for the relevant interest period, the Bank must reasonably determine such a base rate. the rate, taking into account prevailing market practices regarding alternative methods of calculating the base rate, their market representativeness and acceptability for the Bank for the purposes of managing its assets and liabilities, as well as notify the Borrower accordingly;

(b) if the loan currency is a currency other than the US dollar, euro, or Japanese yen, such a base rate reflecting market practice for such currency should be specified in the Loan Agreement.;

(c) provided that if: (i) the Bank determines that the base rate for the Loan currency has permanently ceased to be quoted, or the regulatory authority has made a public statement or published information to the base rate administrator, declaring that such base rate is or will no longer be representative or published; or (ii) The Bank is no longer able, or it is no longer a commercially acceptable Bank, to use such a base rate for asset and liability management purposes, the base rate means such other comparable base rate for the Loan currency, including any applicable spread, which the Bank must determine and notify the recipient in accordance with paragraph (d) Section 3.02 "Interest".

5. The definition of "Variable Spread" in the appendix to the general terms and conditions should be changed and reformulated completely as follows:

"Variable Spread" means, for each interest period, the Bank's variable spread on loans denominated in the currency of the Loan issued by the Bank, with the same weighted average maturity as the Loan itself, effective on 12.01. Beijing time, one calendar day before the date of interest payment for the previous interest period and expressed as a percentage in year, except in cases where, for the purposes of determining the variable spread on the Loan applicable to the initial interest period, the variable spread will be determined by the Bank at the time of the first withdrawal.

Section III. Other Loan provisions in Yen

But. The following provisions apply to a Yen Loan:

1. Unforeseen expenses

If the Bank incurs any unforeseen expenses as a result of the Borrower:

(a) failed to make any payment within the prescribed time limit;

(b) did not receive the loan in accordance with the withdrawal request;

(d) has requested changes to the repayment schedule; or

(e) made an advance payment for the entire Loan or any part of it, including early repayment as a result of accelerated repayment of the Loan,

In this case, the Borrower is obliged, at the request of the Bank, to pay the Bank the amount of unforeseen expenses incurred by the Bank, which the Bank notifies the Borrower from time to time in reasonable detail.

2. Withdrawal of Loan funds

(a) The Borrower may withdraw the Loan funds by sending a duly completed original withdrawal request to the Bank no later than fifteen (15) business days prior to the expected withdrawal date (or such other date as may be agreed by the Bank and the Borrower). The amount of the proposed Loan must be an amount that does not exceed 52740000000 yen and is at least equivalent to 500000000 yen.

(b) The Borrower may withdraw the Loan funds provided that on or before the expected repayment date, the Bank has determined (at its sole discretion) that the Bank has entered into the necessary financial transactions with respect to the proposed Loan.

3. Unavailability of the yen

(a) If the Bank (acting in its sole discretion) determines at any time that it cannot enter into a corresponding financing agreement in yen, the Bank is not obligated to provide a Withdrawal Loan. In such circumstances, the Bank notifies the Borrower, and after such notification, the relevant withdrawal request is considered withdrawn, and the Bank is not required to provide any Loan in connection with the relevant withdrawal request. The Borrower may submit another withdrawal request after consulting with the Bank, in which case the Bank is required to notify the Borrower of the financial terms of the Loan, including any amended provisions of the Loan Agreement.

(b) no later than thirty (30) days prior to any date of recalculation of the financing rate in yen in respect of the Loan, the Bank must notify the Borrower if the Bank determines that it is unable to enter into a financing agreement in yen for the purpose of supporting this Loan after the date of recalculation of the financing rate in yen, with a requirement from the Borrower to make an advance payment on the relevant loan on the applicable date of recalculation of the financing rate in yen (without any penalties for prepayment or premiums (including prepayment fees) and unforeseen expenses), or the Bank will have the right to re-denominate the principal amount of the relevant Loan in Yen into a Loan in US Dollars, and from the date of such conversion, the applicable Loan will be a Loan in US Dollars.

(c) Upon receipt of a notification from the Bank, in accordance with subparagraph (b) above, no later than fifteen (15) business days prior to the date of recalculation of the financing rate in yen, the Borrower may notify the Bank that he wishes to make an advance payment on the relevant Loan within the applicable date of recalculation of the financing rate in yen without no penalties for prepayment or bonuses (including one-time commission) or unexpected expenses.

4. Upon receipt of the notification from the Bank in accordance with subparagraph (b) above, if the Borrower decides not to make an advance payment on the Loan on the relevant date of recalculation of the financing rate in yen in accordance with paragraph (c) above, it is considered that the Borrower has confirmed the conversion of the relevant Loan into US dollars, starting from the date of recalculation of the financing rate in yen, In this case, the Bank will notify the Borrower of the financial terms of the Loan, including any amended provisions of the Loan Agreement.

I hereby certify that this translation corresponds to the text of the Loan Agreement (Program of Fiscal Management and Financial Sector Reforms - Subprogram 1) between the Republic of Kazakhstan and the Asian Infrastructure Investment Bank in English, signed on August 21, 2024 in Astana.

Head of the Department

editing and linguistic

examination of documents

Department of Document Management

Ministry of Finance

Republic of Kazakhstan

N. Shakharbayeva

President

Republic of Kazakhstan

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