/IRBIS, March 29, 01/ - REUTERS informs, with the reference to the vice- minister of finance, Bolat Jamishev, that from 2002 through 2027 Kazakhstan will compensate for the losses incurred from exchange rate differences for the borrowers of former Jilstroibank, which will require KZT60 mln from the national budget.

It is said that Jilstroibank was granting loans on favorable conditions in 1994- 96 based on the president's decree on new housing policy. These loans are said to be tied up to the U.S. dollar and granted for 30 years at 5% APR. After a sharp devaluation of the tenge in April 1999 most of the borrowers were not able to pay off their loans, is said.

After the petition of the borrowers to the parliament and the government, a special commission was created, which decided to compensate the borrowers for the exchange rate difference.

He added that payment mechanisms were still being corrected, though it was said that the funds will be distributed through Bank CenterCredit, with whom Jilstroibank had merged.

The loans from Jilstroibank were granted at KZT71.4 per dollar weighted average rate, and the government suggested to conclude loan agreements again at KZT88.3 per dollar rate, which was the rate on April 1, 1999, while the difference will be covered by the budget.

The borrowers' liabilities amounted to KZT1.496 bln as of March 1, 2000.

When the contracts were signed the government legally had no obligations to these people, though there are moral obligations because people believed in the president's decree on new housing policy, he added.

The government suggested to keep the interest rate at 5%, thus protecting the interest of the borrowers.

The compensation is to be paid to 2,624 borrowers of Jilstroibank, is said.