Thursday, August 09, 2012 -
International banks are hiking interest rates on loans to investors in Kyrgyzstan in response to parliamentarians’ recent attempted asset grab of the country’s largest gold mine, a senior government official said Thursday.
Kyrgyz politicians went into a feeding frenzy last month over a report that Canadian miner Centerra Gold allegedly committed a long list of illegalities in its running of the fabulously well-endowed Kumtor gold mine. Media reports last month of furious deputies baying for Centerra directors to be arrested and jailed or kicked out of the country, along with calls to seize and nationalize the private firm, rattled investors around the world.
"Events around Kumtor directly influenced the increase in lending rates. The noise we created in late July has hit enterprises hard. International banks raised interest rates," the KyrTAG news agency reported Kyrgyz Deputy Prime Minister Djoomart Otorbaev as saying.
The financial markets clearly are tracking events in Kyrgyzstan, he said.
Just as the country’s political risk was declining and foreign banks were willing to work with businesses in Kyrgyzstan, the Kumtor fiasco broke out.
“But after the scandal over Kumtor, all banks immediately raised the interest rates. It is a chain reaction,” said the deputy premier.
“In late September, we will apply all measures to calm the markets, which are negatively excited,” said Otorbaev.
Meanwhile, the fate of Kumtor is hanging in the balance after lawmakers of Kyrgyzstan’s lower house resolved to renegotiate its contract with the state, as the state announced plans to audit the Canadian-owned mining project.