The Kazakh government has allocated the first tranche of funds worth KZT22.4bn ($186.1m) to construction companies to complete housing projects which are funded by the future owners of housing in Almaty. The state-owned Kazyna Sustainable Development Fund will give these funds to seven commercial banks, which will in turn issue them as loans to 14 construction companies. Construction companies are expected to obtain these loans at market interest rates from 12 May 2008. Special companies will be set up to monitor the use of the funds. As a result, a total of 5,940 flats will be constructed in Almaty, of which 2,640 will be distributed among interest holders who have already invested their money in the construction of their housing and 3,300 will be put up for sale.

Construction companies in Almaty will receive the second tranche worth KZT17bn ($141.2m) in the third quarter of 2008. Over KZT58bn ($481.8m) will be invested in a state programme for protecting the rights of interest holders in housing construction projects in Almaty. This is about 16% of the $3bn fund pledged by Kazakh President Nursultan Nazarbayev in 2008. Some of these funds will be spent in other areas, for example one innovation projects and small and medium businesses.

The government is considering the completion of housing construction projects seriously because coupled with other financial and economic problems of the population this may trigger a social conflict. Several rallies have already taken place in Almaty over the suspension of construction projects. This situation was caused by banks’ inability to provide further loans to construction companies as a result of the global credit crunch. However, there are great concerns that part of these funds will be embezzled.