The Asian Development Bank has approved a $ 1 billion assistance package for Kazakhstan and US $ 500 million loan for Uzbekistan. The funds are intended to mitigate the social and economic impact and COVID-19 caused burden on the health sector. At the same time, targeted support will mostly focus on small and medium-sized businesses, women and vulnerable segments of population.
Social lockdown measures introduced in March had a significant impact on the economy of Kazakhstan. Small and medium-sized enterprises (SMEs) in the hotel industry, education and other service sectors, as well as women who account for more than 65% of the workforce in these sectors, were severely affected by the pandemic. The situation was also aggravated by the fall in oil and other commodity prices, which halved prices for 80% of Kazakhstan’s exports.
ADB’s financial assistance will support health, social protection and employment, as well as the economic recovery plan developed by the government to overcome the negative effects of the pandemic.
As part of government measures in the health care sector, medical workers on the frontline of the fight against Covid-19 are provided with personal protective equipment and receive additional monetary bonuses. In addition, Covid-19-related medical care and hospitalization will remain free of charge.
In Kazakhstan, 1 million socially vulnerable citizens, poor households and workers who lost their income due to the pandemic will receive food packages. The government’s response includes offering affordable mortgage finance, rural and youth employment support, as well as providing employment support for the most vulnerable segments.
SMEs, 42% of which managed or owned by women, will also get assistance in the form of guaranteed loans, deferred tax payments and other tax benefits.
The ADB support package for Kazakhstan is extended under its COVID-19 Active Response and Expenditure Support (CARES) Program. In addition, the issue of co-financing the assistance package from the Asian Infrastructure Investment Bank in the amount of $750 million is being considered. ADB also coordinates closely with the International Monetary Fund, the World Bank, the United Nations and other development partners.
According to ADB President Mr. Masatsugu Asakawa, a $ 500 million loan to Uzbekistan “will provide critical budget support as the government works to contain the spread of the virus, support businesses, and expand social safety nets.”
In Uzbekistan, about 80% of small and medium-sized enterprises (SMEs) suspended their activities after a nationwide isolation regime. The unemployment rate will rise to 16.5% this year from 9.4% in 2019.
The ADB loan will support small businesses and entrepreneurs in Uzbekistan that have been affected by the deterioration of the overall economic situation. Such initiatives include tax measures and credit deferrals for SMEs, of which about 40% are owned or managed by women.
Additional funds for the State Fund for Support of Entrepreneurship will allow to provide credit guarantees to SMEs. Small-scale public works will be funded in the regions. 75% of these jobs will be available to members of low-income families.
The loan will also help expand the existing social protection system in Uzbekistan during the pandemic. The number of low-income families receiving social assistance and childcare benefits from the government will increase from 595,400 to 843,000, with single mothers, divorced women and widows in the priority group.
Temporary disability benefits covering 100% of the average monthly salary will be provided to quarantined parents and caregivers. The salaries of school teachers, at least 70% of whom are women, will continue to be paid.
To date, ADB has provided Uzbekistan with $ 1.56 million worth of technical assistance grants for the procurement of medical supplies. A loan of $ 19.5 million was also reallocated for the purchase of 800 ventilators. /// nCa, 26 June 2020