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

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

The Law of the Republic of Kazakhstan dated December 18, 2024 No. 146-VIII SAM

To ratify the Loan Agreement (Ordinary Operations) (Fiscal Management and Financial Sector Reform Program – Subprogram 1) between the Republic of Kazakhstan and the Asian Development Bank, signed in Astana on August 23, 2024.

President

Republic of Kazakhstan

K. TOKAEV

Unofficial translation

LOAN NUMBER 4405-KAZ

LOAN AGREEMENT (Routine operations) (Fiscal Management and Financial Sector Reform Program – Subprogram 1) between the Republic of Kazakhstan and the Asian Development Bank

Loan Agreement dated August 23, 2024 (hereinafter referred to as the Loan Agreement) between the Republic of Kazakhstan (hereinafter referred to as the Borrower) and the Asian Development Bank (hereinafter referred to as the ADB).

Taking into account the following:

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

B. The Program is the first subprogram of the programmatic approach, as specified in paragraph 1 of Annex 1 to this Loan Agreement (the "Programmatic Approach"), and the Borrower has applied to ADB for a loan for the purposes of the Program;

C. in accordance with the Loan Agreement concluded between the Borrower and the Asian Infrastructure Investment Bank (AIIB), the AIIB is expected to provide a loan to the Borrower in the amount equivalent to 350,000,000 (three hundred and fifty million) US dollars for the purpose of co-financing the Program; and

D. ADB has agreed to provide the Borrower with a loan from ADB's regular capital resources on the terms and conditions set forth in this Loan Agreement.

Subject to the foregoing of this Loan Agreement, the parties to this Loan Agreement have agreed as follows:

ARTICLE I

Loan rules; Definitions

Section 1.01. All provisions of the ADB Loan Rules for Ordinary Operations dated January 1, 2022 (hereinafter referred to as the Loan Rules) are hereby deemed to apply to this Loan Agreement with the same force and effect as if they were fully set out in the text of this Loan Agreement, however, subject to the following amendments:

(a) Section 2.01(qq) has been deleted and replaced by the following:

Program means a program for which ADB has agreed to provide a Loan as described in this Loan Agreement, and its description may be changed from time to time by agreement between ADB and the Borrower.;

(b) the term "Project" should be replaced by the term "Program" wherever it is mentioned in the Loan Rules;

Program Executive Agency means the organization or organizations responsible for the implementation of the Program as provided for in this Loan Agreement;

(d) the term "Project Executive Agency" should be replaced by the term "Program Executive Agency" wherever it is mentioned in the Loan Terms and Conditions;

(e) Section 6.01(b) has been deleted.

Section 1.02. In each case of use in this Loan Agreement, the following terms, defined in the Loan Terms, have the corresponding meanings set out in them, unless they are amended as specified in this document or otherwise required by the context. The additional terms used in this Loan Agreement have the following meanings:

(a) AFM means the Financial Monitoring Agency of the Republic of Kazakhstan;

(b) The ARRFR means the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market;

(c) Partnership financing means funds in local currency received from the funds of a Loan under the Program and specified in paragraph 4 of Annex 4 to this Loan Agreement;

(d) Escrow account means the account specified in paragraph 2 of Annex 3 to this Loan Agreement;

(e) Loan Disbursement Handbook means the ADB's 2022 Loan Disbursement Handbook, as amended periodically;

(f) MF means the Ministry of Finance of the Borrower or any of its successors;

(g) MNE means the Ministry of National Economy of the Borrower;

(h) The National Bank of the Republic of Kazakhstan means the National Bank of the Republic of Kazakhstan;

(i) 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;

(j) Policy actions means policy actions agreed upon by the Borrower and ADB, performed or planned to be performed by the Borrower within the framework of the Program, as specified in the MMR; and

(k) The Executive Agency for the Program, for the purposes and in accordance with the meaning of the Loan Terms, means the MF or any of its successors acceptable to ADB, which is responsible for the implementation of the Program; and

(l) Implementing agencies under the Program means the AFM, the ARRFR, the Ministry of National Economy and the National Bank of the Republic of Kazakhstan, or any of their legal successors acceptable to the ADB.

ARTICLE II

Loan

Section 2.01. (a) ADB agrees to provide the Borrower with borrowed funds from ADB's ordinary capital resources in the amount of fifty-two billion three hundred thirty-five million two hundred seventy-four thousand seven hundred twenty-two yen (JPY 52 335 274 722), and this amount may be converted periodically as part of currency conversion in accordance with the provisions of Section 2.06 of this Loan agreements.

(b) The loan assumes a principal repayment period of 12 (twelve) years and a grace period as defined in paragraph (c) of this section.

(c) The term "grace period" used in paragraph (b) of this section means the period preceding the first repayment date of the principal debt in accordance with the repayment schedule set out in annex 2 to this Loan Agreement.

Section 2.02. The Borrower will pay interest to ADB on the principal amount of the Loan, withdrawn and outstanding, periodically at the rate of each interest period equal to the amount of:

(a) TONA; and

(b) 0.60% according to section 3.02 of the Loan Rules, minus 0.10% according to Section 3.03 of the Loan Rules;

Section 2.03. The borrower will pay a reservation fee of 0.15% per annum. This commission will be charged for the full amount of the Loan (minus the amounts that were periodically withdrawn) upon expiration of 60 (sixty) days after the date of signing this Loan Agreement.

Section 2.04. Interest and other loan payments are payable once every six months on June 1 and December 1 of each year.

Section 2.05. The Borrower pays the principal amount of the Loan withdrawn from the loan account in accordance with the provisions of Appendix 2 to this Loan Agreement.

Section 2.06. (a) The Borrower may at any time request any of the following Loan terms conversions in order to ensure sound debt management:

(i) changing the currency of the entire principal amount of the Loan or any part of it, both withdrawn and outstanding, as well as not withdrawn, to the approved currency;

(ii) a change in the base interest rate applicable to the entire principal amount of the Loan, as well as any portion of it withdrawn and outstanding, from a floating to a fixed interest rate, or vice versa; and

(iii) setting limits on the floating interest rate applicable to the entire principal amount of the Loan, as well as any part of it withdrawn and outstanding, by setting a maximum or minimum of the specified floating interest rate.

(b) Any conversion requested in accordance with paragraph (a) of this section, approved by ADB, will be considered a conversion as defined in section 2.01 (e) of the Loan Rules and will be carried out in accordance with the provisions of article V of the Loan Rules and the Conversion Guidelines.

ARTICLE III

Use of Loan funds

Section 3.01. The Borrower ensures that the Loan funds are used to finance Program costs in accordance with the provisions of this Loan Agreement.

Section 3.02. Loan funds are withdrawn in accordance with the provisions of Annex 3 to this Loan Agreement, which may be amended by agreement between the Borrower and ADB.

Section 3.03. The closing date for withdrawal of funds from the loan account for the purposes of Section 9.02 of the Loan Terms is December 31, 2024, or another date that may be agreed from time to time by the Borrower and ADB.

ARTICLE IV

Special conditions

Section 4.01. During the implementation of the Program, the Borrower fulfills or will fulfill all obligations set out in Appendix 4 to this Loan Agreement.

Section 4.02.As part of the reporting and information specified in sections 7.01 and 7.04 of the Loan Terms, the Borrower will provide or ensure that ADB provides all reports and information reasonably requested by ADB related to (a) partner financing and its use; and (b) Program implementation, including the achievement of goals and the implementation of policy actions.

ARTICLE V

Entry into force

Section 5.01. The date after 90 (ninety) days after the date of signing this Loan Agreement is considered the effective date of the Loan Agreement for the purposes of Section 10.04 of the Loan Rules.

ARTICLE VI

Other provisions

Section 6.01. The Borrower's Minister of Finance acts as the Borrower's representative for the purposes of Section 12.02 of the Loan Rules.

Section 6.02. The following details are provided for the purposes of Section 12.01 of the Loan Terms:

For the Borrower

Ministry of Finance of the Republic of Kazakhstan,

Republic of Kazakhstan

Astana, 010000

Mangilik El Avenue, 8

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

For the ADB

Asian Development Bank

6 ADB Avenue

Mandaluyongk City 1550 Metro Manila Philippines

Fax: (63-2) 8636-2444

In support of the above, the Parties to this Agreement, represented by their authorized representatives, have ensured that this Loan Agreement is signed with appropriate signatures on the date and year indicated above and delivered to ADB headquarters.

REPUBLIC OF KAZAKHSTAN

Signature ____________________

(Full name and position)

ASIAN DEVELOPMENT BANK

Signature ____________________

(Full name and position)

APPENDIX 1

Program Description

1. The main objective of the Program is to reduce macroeconomic and financial vulnerability to external shocks. The programmatic approach includes two subprograms, and the Program is the first subprogram. 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. A more detailed description of the Program is provided in the Letter on Development Policy and the MMR.

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

APPENDIX 2

Repayment schedule

1. The following table shows the repayment dates of the principal debt on the Loan and the percentage of the total principal amount of the Loan payable on each repayment date of the principal debt (next installment). 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 will be determined by ADB by multiplying: (a) the total principal amount of the Loan withdrawn and outstanding at the time of the first repayment date of the principal debt; (b) the next installment for each repayment date of the principal debt, and such repayment amount will be adjusted, if necessary, to take into account the deduction of any amounts specified in paragraph 4 of this annex to which currency conversion applies.

Payment date

The next installment (expressed in %)

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 were not fully disbursed before the first repayment date of the principal debt, then the principal amount of the Loan, in the appropriate case, to be repaid by the Borrower on each repayment date of the principal debt, will be determined as follows:

(a) to the extent that any Loan funds, as appropriate, that should have been disbursed at the time of the first repayment date, the Borrower will pay the amount withdrawn and outstanding at that date in accordance with paragraph 1 of this annex; and

(b) any withdrawal made after the first repayment date of the principal debt shall be repaid on each repayment date of the principal debt falling after the date of such withdrawal, in amounts determined by ADB by multiplying the amount of each withdrawal by a fraction, the numerator of which will be the initial regular payment specified in the table in paragraph 1 of this annex., for the above-mentioned repayment date of the principal debt (initial regular installment), and the denominator will be the sum of all remaining initial regular installments for the repayment dates of the principal debt, on or after this date, these payment amounts will be adjusted, if necessary, to deduct any amounts specified in paragraph 4 of this annex to which currency conversion applies.

3. Funds withdrawn within 2 calendar months prior to any of the repayment dates of the principal debt, solely for the purpose of calculating the principal amounts payable on any repayment date, should be considered withdrawn and outstanding at the time of the second repayment date of the principal debt after the withdrawal date, and this amount is due to be repaid on each repayment date of the principal debt, starting from the second repayment date of the principal debt after the withdrawal date.

4. Regardless of the provisions of paragraphs 1 and 2 of this annex, when converting the currency of the entire principal withdrawn Loan amount or any part thereof into an approved currency, the amount of funds converted into the aforementioned approved currency, which is due to be repaid on any of the repayment dates of the principal debt during the conversion period, will be determined by ADB by multiplying such amount in the currency of its denomination immediately prior to the aforementioned conversion, either: (a) to a currency exchange rate reflecting the amounts in the specified approved currency, payable to ADB as part of a currency hedging transaction related to the aforementioned conversion; or (b) as decided by ADB in accordance with the guidelines for conversion to the exchange rate component of the established rate.

5. If the principal amount of the Loan, withdrawn and outstanding, is periodically denominated in more than one Loan currency, the provisions of this annex should be applied separately to the amounts denominated in each Loan currency in order to develop a separate repayment schedule for each of these amounts.

APPENDIX 3

Withdrawals of loans

1. Except as specified in this annex or unless otherwise agreed with ADB, the loan funds will be disbursed in accordance with ADB's Guidelines for Disbursement of Borrowed Funds.

2. (a) Prior to submitting the first application to ADB for withdrawal of funds from the loan account, the Borrower shall designate an account (escrow account) with the National Bank of the Republic of Kazakhstan to which all funds from the loan account will be deposited. The Deposit account is created, managed and closed in accordance with the applicable regulations and procedures of the Borrower.

(b) Separate statements and documentation on the escrow account are maintained in accordance with financial reporting principles acceptable to ADB. Upon receipt of an ADB request, the Borrower organizes an audit of the financial statements of the escrow account by independent auditors, whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with international Standards on Auditing or their national equivalent acceptable to ADB. Immediately after preparation, but in any case no later than 6 months from the date of the ADB's request, certified copies of such audited financial statements and the auditors' report on these financial statements in English must be submitted to ADB.

3. No loan funds should be withdrawn to finance the items specified in the addendum to this appendix.

4. Regardless of the provisions of this Loan Agreement and with the exception of other possible agreements with ADB, withdrawal from the loan account is made only on condition that: (a) the policy actions necessary to issue the Loan funds have been complied with by the Borrower; and (b) these policy actions continue to apply.

Addendum to Appendix 3

List of exceptions

No loan withdrawals 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, Edition 3 (Table), or any group or subgroup provided for by further changes to the United Nations Standard Classification of International Trade, as indicated in ADB's notification to the Borrower:

Table: Ineligible 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 (excluding gold ore and concentrates)

Source: United Nations Standard Classification of International Trade, vol. 3

(ii) expenses related to goods delivered on the basis of contracts for which financing has been made or agreed by any national or international financial institution or agency, including any contracts financed under any loans or grants from ADB;

(iii) expenses related to goods intended for military or paramilitary purposes, or luxury goods;

(iv) Drug costs;

(v) expenses for environmentally hazardous goods, the production, use or import of which is prohibited under the Borrower's legislation or international agreements to which the Borrower has acceded; and

(vi) 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 4

Program implementation and other issues

Implementation mechanisms

1. The Ministry of Finance, as the Executive Agency for the Program, is responsible for the overall implementation of the Program. The implementing agencies of the Program are responsible for the daily implementation of the relevant areas of the Program.

Political action and dialogue

2. The Borrower ensures that all policy actions taken under the Program are maintained throughout the duration of the Programmatic Approach.

3. The Borrower shall inform ADB of the discussions on policy actions with other multilateral and bilateral aid agencies that may have implications for the implementation of the Program, and will provide ADB with the opportunity to comment on all policy proposals arising from them. The borrower will take into account the ADB's point of view before finalizing and implementing any such proposal.

Using partner financing

4. 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.

Anti-corruption policy and management methods

5. The Borrower, the Program's Executive Agency, and the Program's implementing agencies will ensure: (a) compliance with ADB's 1998 Anti-Corruption Policy, as amended, and recognize that ADB reserves the right to investigate, directly or through its agents, any alleged cases of corruption, fraud, collusion, or coercion related to to the Program; and (b) cooperate in any such investigation and provide all necessary assistance for the satisfactory completion of such investigation.

Monitoring and reporting

6. The Borrower, through the Executive Agency for the Program and the implementing agencies for the Program, will provide ADB with the opportunity to analyze and provide comments on all related studies, regulations, orders, rules and regulations under the jurisdiction of the relevant agencies, which are likely to affect the objectives and implementation of the Program.

I hereby certify that this translation corresponds to the text of the Loan Agreement (Ordinary Operations) (Program of Fiscal Management and Financial Sector Reforms - Subprogram 1) between the Republic of Kazakhstan and the Asian Development Bank in English, signed on August 23, 2024 in Astana.

Head of the Department

editing and linguistic

examination of the Department's documents

Ministry of Document Management

Finance of the Republic of Kazakhstan

N. Shakharbayeva

President

Republic of Kazakhstan

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