Tajikistan Financial Institutions Initiatives

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Credit lines under sovereign guarantee and equity investments for two majority privately owned Tajik banks, Tajikbankbusiness and Orienbank, and appropriate supporting technical assistance. Project objectives: a) Promote the development of the small and medium-sized enterprises sector in Tajikistan and the privatisation of small state companies; b) strengthen the financial position, corporate governance and financial intermediation capability of TBB and OB. Tajikistan is at a very early stage of transition, and is recovering from civil war. The transition impact from this project is expected to be high, given that term-funding sources are scarce, the banking sector is weak, and the fact that the Government launched a new privatisation programme in May 1996. Tajikbankbusiness (TBB) and Orienbank (OB), two majority privately owned Tajik banks. Project implementation will be supported by a Project Implementation Unit (funded by technical assistance) and by appropriate Institutional Development Programmes for each bank. A maximum of US$ 8.6 million (ECU 6.8 million). For each bank this will consist of: a) a credit line of US$ 4 million (ECU 3.15 million) provided in two tranches of US$ 2 million (ECU 1.575 million); b) a potential equity investment up to a maximum of US$ 300,000 (ECU 236,000). Maximum amount: US$ 8.6 million (ECU 6.8 million). The project has been classified C/0, having no direct impact on the environment. TBB and OB will carry out their operations in accordance with the EBRD's Environmental Procedures for Local Banks, which provides for the integration of environmental due diligence into the credit/investment appraisal process and includes a requirement that borrowers comply with national/local health and safety and environmental regulations and standards. Both banks will submit annual environmental reports to the EBRD. Technical assistance has been provided for project preparation and will be provided for project implementation.