Debt Reorganization Plan: Altering Distressed Loans
In the heart of Kazakhstan, the village of Telman in the Atbasar district, LLP "Karajar Agro-2019" is making a significant impact. This agricultural enterprise, sowing grain and leguminous crops on approximately 15 thousand hectares of land, has received crucial support from the JSC "Fund for Problem Loans".
Established in 2012 to assist banks in cleansing their balance sheets of non-performing loans, the Fund has since played a pivotal role in the financial rehabilitation and sustainability of the agricultural sector. The Fund's key contributions include debt restructuring, preferential financing, long-term investment support, and the use of guarantee instruments.
One of the most notable examples of the Fund's impact is the Zhaltyr Elevator, which was purchased and transferred to the investor, Qaz-Qar LLP. The Fund's intervention helped revive the elevator's production, and it now stores 120,000 tons of grain.
LLP "Karajar Agro-2019" itself has benefited significantly from the Fund's support. The enterprise, which sometimes reaches a yield volume of 50 thousand tons, primarily consisting of wheat, barley, chickpeas, and peas, was taken over in a dilapidated state with debts. The Problem Credit Fund provided support in repaying bank debt, enabling the enterprise to continue operations and invest in modernization.
The enterprise's success extends beyond its operations, as it aims to benefit the village and its population. Plans include the construction of a bathhouse, a sports center, a café, and assistance with the repair of the local school.
The Fund's support has not only helped individual enterprises but also the broader agricultural sector. From 2012 to 2017, the fund was under the management of the National Bank of Kazakhstan, but since 2017, it has been transferred to the jurisdiction of the Ministry of Finance of Kazakhstan. Since 2019, the Fund has provided systemic support to 44 agricultural companies, preserving over 5,843 jobs.
In 2023, the agricultural sector faced serious natural challenges, including drought during spring fieldwork and heavy rains during the harvesting campaign. Despite these adversities, the sector managed to sow over 806 thousand hectares of wheat, flax, barley, chickpeas, sunflower, and other crops. More than 1.85 million tons of crops were harvested, worth over 100 billion tenge.
The Government of the Republic of Kazakhstan is the sole shareholder of the fund, and its support has helped stabilise the situation in several regions and prevent socio-economic consequences for rural areas. More than 60% of the products from LLP "Karajar Agro-2019" are exported to countries in Central Asia, Afghanistan, China, Turkey, Iran, and Italy, highlighting the global impact of the Fund's efforts.
Kazakh grain, particularly hard wheat varieties, is highly valued in China due to its high quality and protein content. The Fund's support includes debt restructuring, purchasing problem assets, and adopting a flexible approach to repayment, ensuring the sector's economic resilience and sustainability.
In summary, the JSC "Fund for Problem Loans" contributes to the agricultural sector by restructuring agricultural debt, providing concessional loans, and facilitating investment projects that improve financial sustainability and sector growth. These measures help agricultural enterprises avoid default, maintain operations, and invest in modernization, ultimately enhancing the sector’s economic resilience and sustainability in Kazakhstan.
Sports facilities could be part of the plans for the construction in the village of Telman, as LLP "Karajar Agro-2019" also intends to build a sports center as part of their proposed development projects. With the progressive improvement of the agricultural sector in Kazakhstan, better weather conditions for sports activities may also be anticipated in the future, offering more opportunities for the local community.
