On the ratification of the Loan Agreement (Loan for Financing Development Policy based on the private sector and More Sustainable Economic Recovery) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

Home / RLA / On the ratification of the Loan Agreement (Loan for Financing Development Policy based on the private sector and More Sustainable Economic Recovery) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

On the ratification of the Loan Agreement (Loan for Financing Development Policy based on the private sector and More Sustainable Economic Recovery) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

The Law of the Republic of Kazakhstan dated December 1, 2022 No. 162-VII SAM.

To ratify the Loan Agreement (A loan for financing development policy based on the private sector and a more Sustainable economic Recovery) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development, signed in Nur-Sultan on August 24, 2022.

President of the Republic of Kazakhstan

K. TOKAEV

Unofficial translation

LOAN NUMBER 9311-KZ

LOAN AGREEMENT (Loan to finance private sector-based development Policy and more Sustainable Economic Recovery) between the REPUBLIC OF KAZAKHSTAN and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

LOAN NUMBER 9311-KZ

LOAN AGREEMENT

The Agreement from the date of its signing concluded between the REPUBLIC OF KAZAKHSTAN (the "Borrower") and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank") for the purpose of providing financing for the Program (as defined in the addendum to this Agreement). The Bank has decided on this financing based, inter alia, on: (i) the actions taken by the Borrower under the Program, as described in section I. A of Annex 1 to this Agreement; and (ii) the Borrower's implementation of an agreed macroeconomic policy. The Borrower and the Bank have hereby agreed on the following:

ARTICLE I - GENERAL CONDITIONS; DEFINITIONS

1.01. The General Terms and Conditions (as defined in the addendum to this Agreement) apply to and form part of this Agreement.

1.02. Unless the context otherwise requires, the terms used in this Agreement starting with capital letters have the meanings attributed to them in the General Terms and Conditions or the addendum to this Agreement.

ARTICLE II – LOAN

2.01. The Bank agrees to provide the Borrower with an amount of € 345,700,000 (three hundred and forty-five million seven hundred thousand euros), as such, the amount may be converted periodically through Currency Conversion (the "Loan").

2.02. The one-time Loan fee is one quarter percent (0.25%) of the Loan amount.

2.03 The commission for reserving Loan funds is one quarter of a percent (0.25%) per year of the Outstanding Loan Balance.

2.04. The interest rate is equal to the Reference Rate plus the Variable Spread or such rate as may be applied after the Conversion; it is determined in accordance with Section 3.02 (e) of the General Terms and Conditions.

2.05 The payment dates are April 15th and October 15th of each year.

2.06. The principal amount of the Loan will be repaid in accordance with Appendix 2 to this Agreement.

2.07. Without prejudice to the provisions of Section 5.05 of the General Terms and Conditions, the Borrower must promptly provide the Bank with such information regarding the provisions of Article II as the Bank may reasonably request from time to time.

ARTICLE III – THE PROGRAM

3.01. The Borrower declares his commitment to the Program and its implementation. For this purpose and on the basis of section 5.05 of the General Terms and Conditions:

(a) The Borrower and the Bank should periodically, at the request of either party, exchange views on the Borrower's macroeconomic policy and progress made in implementing the Program.;

(b) prior to each such exchange of views, the Borrower must provide the Bank with a progress report on the Program for review and comment, with such details as the Bank may reasonably request.;

(c) without prejudice to paragraphs (a) and (b) of this section, the Borrower must promptly inform the Bank of any situations that may significantly hinder the achievement of the objectives of the Program or the implementation of any actions taken under the Program, including any actions specified in section I of Annex 1 to this Agreement.

ARTICLE IV - LEGAL MEASURES OF THE BANK

4.01. An additional case involving a temporary suspension includes the following: the occurrence of a situation in which the execution of the Program or a significant part of it becomes unlikely.

ARTICLE V - ENTRY INTO FORCE; TERMINATION

5.01. An additional condition for entry into force is as follows: The Bank is satisfied with the progress made by the Borrower during the implementation of the Program and the adequacy of the Borrower's macroeconomic policy.

5.02. The deadline for the entry into force of this Agreement is the date following the expiration of one hundred and eighty (180) days after the date of signing this Agreement.

ARTICLE VI - REPRESENTATIVES; ADDRESSES

6.01. The Borrower's representative is the Deputy Prime Minister, the Minister of Finance.

6.02. For the purposes of section 10.01 of the General Terms and Conditions: (a) the address of the Borrower:

Ministry of Finance

Republic of Kazakhstan

Nur Sultan, 010000

Mangilik El Avenue, 8; and

(b) the Borrower's email address:

Fax number:

(7) (7172) 750201

6.03. For the purposes of Section 10.01 of the General Terms and Conditions: (a) address of the Bank:

International Bank for Reconstruction and Development

United States of America

Washington, DC, 20433

1818 N Street, N.W.; and

(b) the Bank's email address:

Fax number:

1-202-477-6391

AGREED on the date of signing.

FOR THE REPUBLIC OF KAZAKHSTAN ________________________________________ Authorized representative First and last name: Yerulan Zhamaubayev Position: Minister of Finance Date: August 24, 2022 FOR THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT _________________________________________ Authorized representative First and last name: Tatiana Proskuryakova Position: Regional Director for Central Asia Date: August 24, 2022

APPENDIX 1

Program actions; availability of Loan funds

Section I. Actions taken under the Program

But. Actions taken within the framework of the Program.

The actions taken by the Borrower under the Program include the following:

Component 1. Support for a more competitive economy driven by a more dynamic private sector and accountable public sector

1. In order to promote competition and assist in equalizing market conditions for all enterprises in the economy, the Borrower established and launched the Agency for the Protection and Development of Competition of the Republic of Kazakhstan as a separate government body with authority, among other things, to (a) investigate and prevent uncompetitive practices and mergers, (b) impose penalties, as evidenced by: (i) subparagraph 2) of paragraph 1 of Decree of the President of the Republic of Kazakhstan dated September 8, 2020 No. 407 "On measures to further improve the public administration system of the Republic of Kazakhstan"; and (ii) subparagraph 3) of paragraph 13 and subparagraphs 9) - 26) of paragraph 15 of Chapter 2 of the Decree of the President of the Republic of Kazakhstan dated October 5, 2020 Year No. 428 "On some issues of the Agency for Protection and Development of Competition of the Republic of Kazakhstan".

2. In order to strengthen the enabling environment for the telecommunications sector and the digital economy in general and attract investment in this sector, the Borrower: (a) improved the regulatory framework for the protection of personal data and the promotion of big data-driven technologies in the private sector; (b) simplified requirements and facilitated investments by introducing the principle of technological neutrality in licensing and reducing the tariff for the use of the radio frequency spectrum by at least 90% for a period of at least five years, as evidenced by: (i) paragraphs 17, 28 and 34 of Article 1 of the Law of the Republic of Kazakhstan dated June 25, 2020 Year No. 347-VI SAM "On Amendments and additions to Certain Legislative Acts of the Republic of Kazakhstan on the regulation of digital technologies"; (ii) Paragraph 29 of Article 1 of the Law of the Republic of Kazakhstan dated June 29, 2020 No. 35 2-VI SAM "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on improving the business climate"; and (iii) subparagraph 13) of paragraph 7 of Article 1 of the Law of the Republic of Kazakhstan dated December 10, 2020 No. 382-VI SAM "On Amendments and Additions to the Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" (Tax Code) and the Law of the Republic of Kazakhstan "On the Enactment of the Code of the Republic of Kazakhstan "On taxes and other mandatory payments to the budget" (Tax Code).

3. In order to promote open competition, transparency and accountability in the field of public procurement, the Borrower (a) submitted to Parliament a draft of amendments and additions to the Law on Public Procurement in order to: (i) establish open tender as the default procurement method; (ii) reduce the grounds for using procurement from a single source, as well as a clear indication of the exceptional circumstances under which purchases from a single source are permitted.; (b) submitted to Parliament a draft of amendments and additions to the Law "On Public Procurement" and adopted amendments to the procurement procedures of quasi-public sector entities to reduce the grounds for the use of single-source procurement by quasi-public sector entities, as evidenced by: (i) the draft Law of the Republic of Kazakhstan "On Amendments and Additions to some legislative acts of the Republic of Kazakhstan on public procurement, procurement of subsurface users and subjects of natural monopolies, communications, motor transport and defense"; and (ii) Minutes of the meeting of the Board of JSC NWF Samruk-Kazyna dated November 2, 2020 No. 40/20.

4. In order to support market discipline and fair competition in the banking sector, the Borrower, together with the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, eliminated non-compliance with regulatory requirements in three commercial banks in accordance with the Law "On Banks and Banking Activities", as evidenced by:(i) Resolution of the Board of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market dated September 17, 2020 No. 80 "On Revocation of the License to conduct Banking and Other Operations on the Securities Market issued by JSC Tengri Bank"; (ii) Resolution No. 22 of the Board of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market dated February 11, 2021 "On Revocation of the License for Banking and Other Operations and Activities on the Securities Market issued by AsiaCredit Bank JSC" and (iii) Resolution of the Board of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market dated On June 24, 2021, No. 74 "On Revocation of the License for Banking and Other Operations issued by Capital Bank Kazakhstan JSC".

5. In order to reduce corruption and increase accountability in the public and quasi-public sector, the Borrower: (a) has imposed a ban on accepting gifts, financial rewards and services in exchange for actions or omissions within their official authority by civil servants, persons subject to anti-corruption restrictions, and their family members; and prohibition on opening and holding accounts in foreign banks; (b) Expanded responsibility for all persons authorized to perform public functions, including the management of the quasi-public sector, for committing corruption offenses; and (c) control over the implementation of anti-corruption legislation has been strengthened through the introduction of a requirement to establish services to monitor compliance with anti-corruption legislation in the quasi-public sector, as evidenced by: (i) paragraph 5 of Article 1 of the Law of the Republic of Kazakhstan dated December 19, 2020 No. 384-VI "On Amendments and Additions to Certain Legislative Acts of the Republic Kazakhstan on strengthening the protection of citizens' rights in criminal proceedings and combating corruption"; (ii) paragraph 1, sub-paragraphs 1) and 4) of paragraph 12 of Article 1 of the Law of the Republic of Kazakhstan dated October 6, 2020 No. 365-VI SAM "On Amendments and additions to certain Legislative acts of the Republic of Kazakhstan on combating corruption".

Component 2. Laying the foundation for a more sustainable economic transition

6. In order to increase energy efficiency and reduce greenhouse gas (GHG) emissions, the Borrower has submitted amendments and additions to the The Law "On Energy Conservation and Energy Efficiency Improvement", which ensure: (a) the expansion of energy consumption reporting to include all subjects of the quasi-public sector and the budgetary sector; (b) the updating of reporting requirements for more efficient monitoring of energy consumption; (c) the inclusion of energy efficiency requirements in all purchases of goods and services from government organizations; (d) the adoption of a new certification system for individual energy auditors, as evidenced by: resolution Government of the Republic of Kazakhstan No. 621 dated September 30, 2020 on the draft Air defense System "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on energy conservation and Energy Efficiency Improvement".

7. In order to strengthen the Emissions Trading System (hereinafter referred to as the ETS), a key tool for fulfilling the Borrower's obligations under the nationally determined contribution (hereinafter referred to as the ONUV) to GHG emissions reduction, the Borrower: (a) approved the requirement for the allocation of emission quotas by comparing the intensity of emissions from production processes for all enterprises in the ETS as evidenced by paragraph 2 of Article 291 of the Environmental Code of the Republic of Kazakhstan dated January 2, 2021 No. 400-VI SAM, which entered into force on July 1, 2021; and (b) strengthened the functioning of the ETS with respect to carbon unit trading and the functioning of the carbon unit registry, as evidenced respectively by: (i) Order No. 221 of the Acting Minister of Ecology, Geology and Natural Resources of the Republic of Kazakhstan dated June 29, 2021, registered with the Ministry of Justice of the Republic of Kazakhstan dated July 27, 2021, No. 23719 "On the Approval of the Rules for Trading in Carbon Units", and (ii) order Minister of Ecology, Geology and Natural Resources of the Republic of Kazakhstan No. 251 dated July 14, 2021, registered with the Ministry of Justice of the Republic of Kazakhstan dated July 15, 2021 No. 23555 "On Approval of the Rules for the Formation and Maintenance of the State Register of Carbon Units".

8. In order to increase the installed capacity of renewable energy production, the Borrower: (a) established the procedure for determining the surcharge for supporting the use of renewable energy sources, which applies from July 1, 2021; (b) provided state financial support to the settlement and financial center for the support of renewable energy sources in case it is unable to fulfill its obligations to energy-producing organizations; (c) it is possible to conclude a contract for the purchase and sale of electric energy for a period of 20 years based on the results of auctions held after January 1, 2021, as evidenced by sub-paragraphs 2) and 5) of paragraph 2 of Article 1 of the Law of the Republic of Kazakhstan dated December 7, 2020 No. 380-VI "On Amendments and Additions to some legislative acts of the Republic of Kazakhstan on supporting the use of renewable energy sources and the electric power industry"; and (d) the rules for determining the maximum auction prices for electric energy produced by energy waste disposal and a model contract for connecting energy waste disposal facilities for auctions for the selection of energy waste disposal projects have been adopted, as evidenced by subparagraph 3) of paragraph 1 and subparagraph 3) of paragraph 5 of Article 1 of the Law of the Republic of Kazakhstan. Dated November 9, 2020, No. 373-VI "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Energy, Transport and State Awards".

9. In order to protect, preserve and restore the environment, the Borrower has introduced requirements for: (a) the availability of permits and reporting on emissions from facilities that harm the environment, including flaring and associated gas emissions, providing for administrative penalties for false information and exceeding established limits; (b) the use of reference books on the best available techniques in order to prevent pollution and minimize anthropogenic impact on the environment in certain sectors of the economy; (c) conducting mandatory strategic environmental impact assessments within the framework of government projects and territorial development programs; and (d) conducting vulnerability assessments to climate change and planning adaptation measures for agriculture, water resources management, forestry and population protection, as indicated in articles 51, 106 - 119, Paragraph 6 of Article 113, Articles 315 – 316 of the Environmental Code of the Republic of Kazakhstan dated January 2, 2021 No. 400-VI SAM, which entered into force on July 1, 2021.

Section II Availability of loan funds

A. General provisions. The Borrower may withdraw the Loan funds in accordance with the provisions of this section and those additional instructions specified by the Bank in the notification to the Borrower.

B. Allocation of Loan funds. The loan is allocated as a one-time tranche from which the Borrower can withdraw borrowed funds. The distribution of Loan amounts for these purposes is shown in the following table:

Allocation of funds

The amount of the allocated loan

(expressed in euros)

(1) One-time tranche

345 700 000

TOTAL AMOUNT

345 700 000

C. Conditions for allocation of the tranche.

1. Funds in the form of a One-time Tranche cannot be withdrawn until the Bank is satisfied with: (a) the Program implemented by the Borrower; (b) the consistency of the Borrower's macroeconomic policy.

D. Closing date. The closing date is December 31, 2023.

APPENDIX 2

Individual repayment schedule

The Borrower undertakes to repay the principal amount of the Loan as follows:

The date of payment for repayment of the principal debt

The contribution share in %

1. October 15, 2024

5,56

2. April 15, 2026

5,56

3. October 15, 2026

5,56

4. April 15, 2028

8,33

5. October 15, 2028

8,33

6. April 15, 2029

8,33

7. October 15, 2029

8,33

8. April 15, 2030

8,33

9. October 15, 2030

8,33

10. April 15, 2031

6,67

11. October 15, 2031

6,67

12. April 15, 2032

6,67

13. October 15, 2032

6,67

14. April 15, 2033

6,66

addition

Definitions

1. "Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market" means an Agency established by By decree The President of the Republic of Kazakhstan dated November 11, 2019 No. 203, or any of his successors acceptable to the Bank.

2. "Agency for Protection and Development of Competition of the Republic of Kazakhstan" means an Agency established by By decree The President of the Republic of Kazakhstan dated September 8, 2020 No. 407, or any of his successors acceptable to the Bank.

3. "NDT" means the best available techniques.

4. The Law "On Energy Conservation and Energy Efficiency Improvement" means the Law of the Republic of Kazakhstan dated January 13, 2012 No. 541-IV.

5. "ETS" means the emissions trading system, also known in the Republic of Kazakhstan as the carbon units trading system.

6. "Settlement and Financial Center for the support of renewable energy sources" means a company established for the purpose of centralized purchase and sale of electric energy produced by facilities for the use of renewable energy sources, facilities for energy waste disposal, and flood electric energy supplied to the electric grid of the unified electric power system of the Republic of Kazakhstan, in accordance with the order The Minister of Energy of the Republic of Kazakhstan dated March 31, 2015 No. 256 "On the definition of a settlement and financial center for the support of renewable energy sources" or its successor.

7. "General Terms and Conditions" means the "General Terms and Conditions of the International Bank for Reconstruction and Development for Financing the IBRD, Financing Development Policy" dated December 14, 2018 (revised on August 1, 2020, December 21, 2020 and April 1, 2021 and January 1, 2022).

8. "GHG" means greenhouse gases.

9. The Law "On Banks and Banking Activities" means the Law of the Republic of Kazakhstan dated August 31, 1995 No. 2444.

10. "ONUW" means a nationally determined contribution submitted in accordance with the Paris Agreement The United Nations Framework Convention on Climate Change (UNFCCC), which is a commitment to action on climate change aimed at limiting global warming.

11. The Law "On Public Procurement" means the Law of the Republic of Kazakhstan dated December 4, 2015 No. 434-V.

12. "Program" means a program of goals, policies and actions that are defined or referenced in the Borrower's letter to the Bank dated October 6, 2021, where the Borrower declares to the Bank its obligations to implement the Program and requests the Bank's assistance in supporting its implementation, and which includes the actions taken, including those specified in section I of Annex 1 to this Agreement, and actions to be taken in accordance with the objectives of the program.

13. NWF Samruk-Kazyna JSC means the joint-stock company National Welfare Fund Samruk-Kazyna, established in accordance with Decree No. 669 of the President of the Republic of Kazakhstan dated October 13, 2008.

14. "Rules of Procurement of goods, works and Services of the Joint-stock Company National Welfare Fund Samruk-Kazyna" means the Rules of the Joint-Stock Company National Welfare Fund Samruk-Kazyna dated January 28, 2016 No. 126.

15. "Date of Signing" means the later of the two dates on which the Borrower and the Bank signed this Agreement, and this definition applies to all references to the "date of signing the Loan Agreement" in the General Terms and Conditions.

16. "One-time tranche" means the Loan amount allocated under the "One-time Tranche" category in the table given in Part B of Section II of Annex 1 to this Agreement.

I hereby certify that this translation corresponds to the text of the Loan Agreement (Loan for Financing Development Policy based on the Private Sector and More Sustainable Economic Recovery) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development in English, signed on August 24, 2022 in Nur-Sultan.

Head of the Department

editing and linguistic

examination of documents

Department of Document Management

Ministry of Finance

Republic of Kazakhstan

B. Akhmetzhanova

President

Republic of Kazakhstan

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