IFC Backs Kyrgyz Republic’s First Sustainability Bonds to Spur Green, Social Growth

In a groundbreaking move to boost sustainable development and improve financial inclusion in the Kyrgyz Republic, the International Finance Corporation (IFC) has committed to subscribing up to $15 million in the nation’s first-ever sustainability bonds. Issued in local currency by the Kyrgyz Investment and Credit Bank (KICB), this pioneering transaction marks a critical step forward in introducing environmental and social financial instruments into the country’s emerging capital market.

These sustainability bonds are designed to unlock green and social financing channels across the Kyrgyz economy, with a strong emphasis on microloans for low-income households, credit access for women-led and small businesses, and investment in climate-positive projects such as renewable energy, sustainable agriculture, and energy-efficient infrastructure.

Unlocking Green and Inclusive Finance in Kyrgyzstan

The IFC’s support will enable KICB to significantly scale up its portfolio of loans targeted at sectors that align with the United Nations Sustainable Development Goals (SDGs). Through the bond proceeds, KICB will:

• Expand home microloans for financially underserved families, promoting access to better housing and living standards.

• Enhance financing for small and medium-sized enterprises (SMEs), especially those led by women entrepreneurs, who face greater barriers in accessing capital.

• Fund green projects that improve energy efficiency, foster climate resilience, and support sustainable livelihoods in rural and urban areas.

Arif Ali, CEO of KICB, emphasized the transformative potential of the initiative:

“IFC’s investment in KICB’s sustainability bonds reflects our commitment to empowering small businesses and women entrepreneurs, and to promoting environmental and social sustainability. By channeling funds toward green and inclusive projects, we are contributing to a more resilient and equitable future for the Kyrgyz Republic.”

Tackling the Financing Gap for SMEs and Households

Access to finance remains a pressing challenge in the Kyrgyz Republic. According to the World Bank Enterprise Survey, only 14% of small businesses and 32% of medium-sized businesses have access to a bank loan or line of credit. Additionally, credit to the private sector remains limited—at just 22% of GDP—with the total financing gap for small enterprises estimated at $3 billion, equivalent to 21% of the country’s GDP.

The lack of long-term, affordable financing options significantly hampers economic growth, especially among women-owned and rural enterprises that struggle to secure traditional bank loans. The issuance of sustainability bonds, coupled with IFC’s backing, introduces an innovative mechanism to help bridge this financing gap by providing targeted funding to sectors that yield both economic and social dividends.

A Regional Milestone for Sustainable Finance

The IFC’s engagement with KICB represents more than just a local success—it serves as a model for the broader Central Asia region. The initiative sends a strong signal to other financial institutions and governments on the potential of sustainability bonds as a means of channeling capital toward development priorities.

Hugh Riddell, World Bank Group Country Manager for the Kyrgyz Republic, praised the development:

“The landmark issuance of sustainability bonds by our long-standing client KICB marks a significant step forward for sustainable finance in the Kyrgyz Republic. It sets a strong precedent for advancing innovative financing solutions that support inclusive and resilient growth.”

Supported by Global Development Frameworks

This project is also backed by concessional financing from the International Development Association’s (IDA) Private Sector Window, an initiative aimed at mobilizing private investment in the world’s poorest countries. This support plays a critical role in mitigating risks and making the investment more viable for all stakeholders involved.

Sustainability bonds differ from traditional bonds in that their proceeds are exclusively allocated to a mix of green and social projects—ranging from climate finance, clean energy, and waste management to entrepreneurship development, affordable housing, and job creation. These instruments not only support environmental goals but also promote gender equality, social inclusion, and stronger local economies.

Looking Ahead: Catalyzing Resilience and Development

With the successful launch of the first local-currency sustainability bonds, the Kyrgyz Republic has opened a new chapter in its financial sector—one that embraces climate-conscious, socially impactful investing. The KICB-IFC partnership lays a foundation for scaling responsible lending, supporting underserved communities, and aligning the country’s financial architecture with global sustainability principles.

The transaction also positions Kyrgyzstan as a regional trailblazer in sustainable finance, offering a replicable framework for other countries seeking to attract private investment for public good.