AKIPRESS.COM - The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved a loan of EUR661.8 million (approximately USD750 million equivalent) to provide budgetary support to the Government of Kazakhstan in mitigating the adverse impacts of COVID-19 on the health, income and economic opportunities of the country’s population.

The pandemic is disrupting Kazakhstan’s economic activities. Employment and livelihoods are adversely impacted, particularly among the poor and vulnerable. Women are likely most affected as they account for more than 65 percent of the labor force in hard-hit sectors including hospitality, education and retail trade. The oil price shock has significantly brought down export revenues. Without a fiscal response, the economy is expected to contract in real terms by 5.5 percent in 2020. Poverty rates may reach 11-13 percent from the current 6.6 percent level.

The loan will finance Kazakhstan’s COVID-19 Active Response and Expenditure Support (CARES) Program, which supports the country’s immediate COVID-19 health policy response, social protection and employment recovery measures, as well as stimulus measures. Funded by AIIB’s Crisis Recovery Facility (CRF) and cofinanced with the Asian Development Bank (ADB), the financing will fund measures to mitigate the impacts of higher food prices on vulnerable groups, an increase in social payments, new tax incentives to alleviate the financial burden of businesses and cash payments to the unemployed.

While AIIB does not have a regular instrument for policy-based financing, the Bank is extending such financings on an exceptional basis under the CRF to support its members through programs cofinanced with the World Bank or ADB.