EDB: International development banks increase finance for CIS projects by 130% in Q4 2016 (review)
Moscow, 30 January 2017. International development banks (IDBs) have been expanding actively their operations in the CIS countries. The finance they extended in Q4 2016 totalled US $4.4 billion, a 130% increase on the previous quarter. This finding is presented in the review Summary of Investment Operations by International Development Banks in Q4 2016 in the CIS Countries, Namely Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan distributed by Eurasian Development Bank’s Strategic and Sector Research Department. The report states that IDBs primarily focused on the energy sector.
In Q4 2016, the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB), Eurasian Development Bank (EDB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the Black Sea Trade and Development Bank (BSTDB) approved finance for 37 investment projects (including investment project loans and equity investments) in the CIS private sector for a total of US $2 billion, a 340% increase on Q3 2016.
The majority of private projects (62% of the value of all projects signed in Q4 2016) were in the energy sector, with IDBs’ loans totalling US $1.2 billion. The Azeri gas field Shakh Deniz accounted for the largest portion of finance in this sector.
Among the countries, Azerbaijan (55%, two projects) and Kazakhstan (23%, ten projects) were the main recipients of the approved finance for the private sector. The key investors in Azerbaijan were the AIIB and ADB, and in Kazakhstan EDB and the EBRD.
Russia signed four projects worth US $150 million in Q4 2016 (8% of the approved finance for the CIS private sector in the period). Out of this amount, EDB extended US $90 million for the natural resources and mining sector, US $29.4 million for transport and transport infrastructure, and US $10 million for the financial sector. The BSTDB provided US $21.04 for the financial sector.
In the same period, the members of the World Bank Group (WBG) – the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the ADB, the Eurasian Fund for Stabilisation and Development (EFSD, managed by EDB), the Islamic Development Bank (IDB), the EBRD and the EIB – approved 26 sovereign finance projects (including special sovereign loans to governments, technical assistance and grants) totalling US $2.4 billion.
The energy sector accounted for the largest portion of sovereign finance in the quarter (52%, or US $1.2 billion). The WBG’s US $500 million guarantee for gas purchases by Naftogas Ukraine and the ADB’s US $500 million guarantee for the development of the Shakh Deniz 2 field in Azerbaijan were the largest investments in this sector.
Uzbekistan received the largest amount of assistance, US $626 million (26% of all sovereign finance extended by IDBs in the CIS in Q4 2016), for its transport, agricultural and energy sectors. In Azerbaijan, the ADB signed one project in the energy sector worth US $500 million (21%). In Ukraine, the WBG financed one project in the sector, also for US $500 million (21%). In Kazakhstan, the ADB supported one project in the SME sector totalling US $201 million (8%). The authors point out that sovereign finance extended by IDBs in Q4 2016 increased by 65% compared to Q3 of the same year.
Overall, IDBs approved finance for CIS projects for a total of US $10.6 billion in 2016, with the private sector accounting for 31% and sovereign finance 69%.
EDB experts believe that the increase in IDBs’ aggregate finance in the CIS countries to US $4.4 billion in the last quarter of 2016 was associated with the finalisation by the end of the year of internal project preparation procedures by borrowers and lenders.
The full version of the review is available here
Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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30 January, 2017