EDB investment portfolio


58 projects

$2 795.7 million

40.44% of the total

Russia is a founder and the largest member of Eurasian Development Bank, holding two thirds of its charter capital (US $1 billion).



Russia’s GDP growth accelerated in 1Q 2018 after a slowdown at the end of the previous year. According to preliminary estimates of the Russian Federal State Statistics Service, GDP increased by 1.3% YoY in 1Q 2018, compared to a 0.9% YoY increase the quarter earlier. Amid mixed external factors, better economic conditions resulted from recovering domestic economic activity.

Improved consumption supported by increased households’ income and retail lending were key trends in the first quarter. Real wages increased by 9.5% YoY in 1Q to a 5-year high, mainly due to the public sector wages increase to comply with the May 2012 RF President’s executive order.

Benign commodity prices and increased demand for Russian exported goods resulted in an increase in the trade surplus to USD 44.2 billion in 1Q (+28% YoY). There was an upward trend demonstrated by both exports, which were up by 22.9% YoY, and imports (+19.1%) amid improved domestic demand.

Industrial production returned to growth in 1Q 2018 and increased by 1.9% YoY compared to a decrease of 1.7% YoY in the previous quarter. Amid cold weather, the growth was supported by the mining industry and the power sector. Despite quarterly growth in manufacturing (and up 2.2% YoY), its month-by-month trend remains quite volatile. After a 4.7% YoY increase in manufacturing in January, there was a 0.2% YoY decrease in March. Some recovery in manufacturing is expected in 2Q, as, according to PMI data, there was an increase in production in April against a background of rising employment and new orders.

The EEC leading indicator also points to an acceleration of economic activity in Russia in 2Q due to positive trends in its freight turnover, household income, oil price and stock market index components.

Economic recovery is also confirmed by the higher credit ratings assigned by leading rating agencies. Standard & Poor’s upgraded Russia’s sovereign credit rating in foreign currency back to investment grade (ВВВ-) in 1Q and Moody’s revised its outlook to «positive». Having two investment grade ratings in foreign currency increases the chances of attracting investors in Russian securities. 


In January–February, 12-mo inflation in Russia decreased to a historic low of 2.2%, which is also the lowest value among the EDB countries. The slowdown in consumer prices is a result of a high previous year comparison base and the absence of any significant external or domestic factors affecting the economy.

The annual inflation rate remained at its March level of 2.4% in April. However, inflation risks grew in April with increased volatility in the Russian currency. It is unclear how the changes in financial markets that occurred in April will affect both inflation and inflationary expectations, with the latter decreasing to their historic low of 7.8% in March, according to the Bank of Russia. 

Exchange Rate 

After a long period of calm, volatility in RUB rates soared in April. The reason for this was a new round of US sanctions imposed on Russia that caused devaluation of the RUB. In April, the nominal RUB/USD exchange rate declined by 7.7% YoY after an increase of 3.3% YoY in 1Q. The real effective exchange rate decreased by 13.4% YoY in April. At the same time, higher oil prices and favorable domestic macroeconomic conditions provided support to the exchange rate.

Foreign capital outflow exerted additional pressure on the RUB in January–April 2018. Whereas the net capital outflow in 1Q (USD 13.4 billion) was attributed to the increased acquisition of foreign assets in other sectors amid growing yields in developed markets, deteriorating external relations were an additional driver in April. According to Bank of Russia preliminary estimates, the net capital outflow of the private sector increased to USD 7.6 billion in April (and the total outflow amounted to USD 21 billion YTD, compared to USD 17.9 billion in the same period last year).

The trend toward an increasing current account surplus continued in January–April 2018, mainly due to higher commodity prices. The positive current account balance amounted to USD 41 billion in January–April 2018, compared to USD 23.8 billion a year earlier. 

Fiscal Policy 

According to Ministry of Finance preliminary estimates, the budget surplus amounted to RUB 405 billion, or 1.8% of GDP, in 1Q 2018 (compared to a RUB 273 billion deficit, or 1.3% of GDP, a year earlier). A 22.5% YoY increase in revenues from oil and gas made a major contribution to the budget surplus, while the annual growth of revenue from non-oil and gas sectors amounted to a more moderate 4.8% YoY. Budget spending decreased by 6% YoY in 1Q 2018.

The increase in budget revenues made it possible to revise the budget for 2018. According to the budget amendment bill, a budget surplus of RUB 440.6 billion, or 0.45% of GDP, is expected, compared to a RUB 1.27 trillion, or 1.3% of GDP, deficit expected earlier. The increase chiefly resulted from increased revenues from oil and gas. Budget spending in this version is virtually unchanged.

There has been a new budget rule in force since 2018 to direct additional revenues from oil and gas3 to the Russian National Wealth Fund. Thus, if oil prices remain at their 1Q level (USD 65.2 per barrel) throughout this year, inflows to the National Wealth Fund will amount to approximately RUB 3 trillion in 2018.

In 1Q, a new issue of 11-year and 29-year eurobonds was placed by the Ministry of Finance for total amounts of USD 1.5 billion and USD 2.5 billion, respectively. The bonds were mainly sold to bidders from the US and the UK (about 64%), while Russian investors bought 22% of the issue. The funds raised from bonds were mostly used by the Ministry of Finance to buy back Russia-2030 bonds to optimize its debt portfolio and to increase the liquidity of sovereign eurobonds in circulation. 

Monetary Policy 

Amid record low inflation in 1Q 2018, the Bank of Russia lowered its key interest rate on two occasions, to 7.25% in 1Q 2018. The situation changed in April, when it became unclear how global economic conditions would affect inflation. In April, the Bank of Russia decided to keep its key interest rate unchanged and toughened its rhetoric towards interest rates. Thus, while the key interest rate is likely to be lowered further, we believe it more plausible to occur in 2019.

EDB’s investment activities in Russia in 2013-2017 included the following:

  • The Bank tries to support Russia in solving one of its priority tasks to improve national competitiveness and labour productivity, as well as to create conditions for the efficient development of domestic and external markets as envisioned by the Main Areas of Activities of the Government of the Russian Federation until 2018.
  • The Bank will focus on financing major infrastructure projects in the power sector, transport and communications, as well as non-primary sectors with high added value, including those aiming to reduce energy consumption and introduce resource and energy saving technologies and innovations in agriculture.
  • One of the main tasks set by the government is to improve the investment climate and the country’s attractiveness for foreign investors. To this end, the Bank will continue to extend technical assistance to set up an international financial centre in Moscow.
  • Construction of Western Rapid Diameter motorway
    Construction of Central Ring Road 3 toll motorway
  • Increase of mining capacity at OJSC KMAruda
    Construction of Beloporozhskaya GES-1 and Beloporozhskaya GES-2 Power Plants in the Republic of Karelia
  • Трансфин-М Белаз
  • ГТЛК
    Гулькевичи крахмальный завод
  • ММТП
    Мосэнерго 2016

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