EurAsEC Loan

On 9 June a loan agreement was signed with the EurAsEC for $ 3 billion with interest rate of 4.9% per year for 10 years, a grace period of repayment of principal debt is 3 years. The first tranche is expected this week.

Comment

The delayed loan decision and its allocation in tranches do not allow for its effective use for the purposes it was requested i.e. to stabilize the currency market and to delay privatization.

The first tranche of the loan will be used as a lever to obtain other loans, given the first tranche will be spent on the GCR.

The National Bank has to carry out accurate interventions at the Foreign Exchange and a part of the loan will be spent on these purposes. However there will be little effect from these interventions and the exchange rate will not stabilize.

It is obvious that the leadership understands the poor effect of the EurAsEC loan, and that is why, immediately after the information about it the authorities spread information about another USD 1 billion to come from another source. In its attempts to bring down the devaluation expectations the government spreads the most incredible rumors (as if it will come from Turkmenistan or Israel), while the only plausible source of new billion is co-owner of Uralkaliy Suleiman Kerimov.