China Eximbank provides $75.29 million preferential buyer's credit the Osh-Sarytash-Irkeshtam Road Rehabilitation Project (Linked to Project ID#73074)

On December 10, 2008, China Eximbank and the Government of the Kyrgyz Republic signed a $75,280,630.85 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC NO. 2008 (21) TOTAL NO. (61)] for the Osh-Sarytash-Irkeshtam Road Rehabilitation Project (Section from 123 km to 190 km). The loan carried the following borrowing terms: a 20 year maturity, a 2% interest rate, a 0% default (penalty) interest rate, a 5 year grace period, a 0.25% management fee, and a 0.25% commitment fee. The proceeds of the PBC (loan) were to be used by the borrower to finance a $75,290,000 commercial contract (ID#EIBC/OSI-67) that was signed by the Ministry of Transport and Communications of Kyrgyz Republic and China Road and Bridge Corporation (CRBC) on November 25, 2008. According to the Government of the Kyrgyz Republic’s Aid Management Platform (AMP), the first loan disbursement (of $37,640,315) took place on December 31, 2009; the second loan disbursement (of $33,876,284) took place on December 31, 2010; and the third loan disbursement (of $3,764,100) took place on December 31, 2014. The same source notes that, as of 2015, the loan disbursement rate was 99.9% and total loan disbursements amounted to $75,280,699. According to internal data that the Kyrgyz Ministry of Finance shared with AidData in July 2022, the loan achieved a disbursement rate of 99.9% ($75,280,630.85 of $75,290,000) as of December 31, 2021 and its amount outstanding was $38,022,416 as of December 31, 2021. The project, which was co-financed by the Asian Development Bank (ADB), the Islamic Development Bank (ISDB), and China Development Bank (CDB), involved the construction of a road segment that runs from Osh to Sarytash and Irkeshtam (the 123 km to 190 km segment). Upon completion, the project was expected to connect the Kyrgyz Republic with the People’s Republic of China, reduce travel times, and increase trade volumes and economic transactions. China Road and Bridge Corporation was the contractor responsible for project implementation. Construction began in 2008 and the road was officially opened for use on November 22, 2012. However, the project as a whole did not achieve completion until December 20, 2013. An ADB impact evaluation of the project in August 2019 that it 'had a positive effect on poverty reduction and retail trade growth.' However, there are some indications that the preferential buyer's credit for the Osh-Sarytash-Irkeshtam Road Rehabilitation Project financially underperformed vis-a-vis the original expectations of the lender. On or around July 1, 2021, China Eximbank and the Government of the Kyrgyz Republic signed a debt suspension agreement [No. DSSI2021PHASE2-029]. Under the terms of the agreement (captured via Project ID#96102), the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the preferential buyer's credit agreement for the Osh-Sarytash-Irkeshtam Road Rehabilitation Project.

Additional details

1. The Russian project title is Проект «Реабилитации Дороги Южного Транспортного Коридора, Ош Сары-Таш - Иркештам», Участок Км 123 - Км 190. 2. The project is linked to a Chinese Government grant for the Osh-Sarytash-Irkeshtam Road Rehabilitation Project (captured via Project ID#73074). 3. The project identification number in the Government of the Kyrgyz Republic’s Aid Management Platform (AMP) is 8718835225. 4. The loan (PBC) contract can be accessed in its entirety via https://www.documentcloud.org/documents/20488725-kgz_2008_433. 5. The debt suspension agreement [No. DSSI2021PHASE2-028] can be accessed in its entirety via https://www.dropbox.com/s/huwa695j3w9hwig/DSSI%20Agreement%20for%20Kyrgyz%20Republic.pdf?dl=0. 6. A detailed loan repayment reschedule (that the Kyrgyz Ministry of Finance shared with AidData in July 2022) can be accessed via https://www.dropbox.com/s/xg0cmomv0qk7cbj/Repayments.xlsx?dl=0. The schedule reflects actual repayments through December 31, 2021 and planned/scheduled repayments after December 31, 2021. Note also that (a) China Eximbank granted the Government of Kyrgyz Republic a a deferral of payments for the period from August 2021 to December 2021, and (b) the deferred principal and interest amounts are included in the main body of the debt and the repayment amounts of the deferrals (with additional accrued interest for granting a deferment) are already included in the repayment schedule.” 7. The August 2018 ADBI impact evaluation can be accessed via https://www.adb.org/sites/default/files/publication/520321/adbi-wp988.pdf.

Number of official sources

10

Number of total sources

20