In their analysis, the authors emphasize that in a number of countries there are restrictions on obtaining funding from a single source, which helps maintain the sustainability of both public debt and the financial system as a whole.
A large infrastructure project like the construction of a railway may require funds comparable to the size of the economy of an entire country.
“For example, the cost of constructing a section of the railway in Kyrgyzstan between China and Uzbekistan is estimated at $4.7 billion, which is roughly equivalent to one-third of the gross domestic product of the Kyrgyz Republic for 2023,” the experts note.
The EDB believes that cooperation with multilateral development banks could be an effective way to finance such large projects.
Information for reference:
The loan agreement for financing the construction of the China-Kyrgyzstan-Uzbekistan railway was signed between the LLC "China-Kyrgyzstan-Uzbekistan Railway Company" (Joint Project Company) and a syndicate of banks from China, which includes the China Development Bank and the Export-Import Bank.
The total cost of the project is estimated at $4.7 billion. Of this amount, about $2.3 billion will be provided by China as a 35-year loan to the Joint Project Company formed by the three states.
The repayment of this loan will be carried out directly by the Joint Project Company. The remaining $2.3 billion will be contributed by the three states to the authorized capital of this company in the following percentage ratio: China – 51%, Kyrgyzstan and Uzbekistan – 24.5% each.
