EDB investment portfolio


54 projects

$2 466.2 million

40.36% 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).



The Russian economy has continued to recover in 2017. According to Rosstat, GDP growth in 1Q 2017 was 0.5% YoY (0.3% the quarter before). The positive trend was driven by the growth in both exports and domestic demand, supported by a gradual recovery in consumer sales. However, the increase in imports restrained the growth recovery amid strengthening of the Russian rouble.

Economic growth continued to hasten in 2Q 2017. The Ministry of Economic Development estimates annual GDP growth to have accelerated from 1.4% in April to 3.1% in May, which was largely due to the continued recovery in domestic demand. The Ministry estimated GDP growth at 2.9% YoY in June 2017. Consumer activity remains moderate, but is tending towards a sustainable recovery. The positive growth in salaries since February 2017 and low unemployment level contributed to a positive retail turnover trend (for the first time since 2014). The growth in retail turnover in April and May was 0.1% YoY and 0.7% YoY, respectively. Investment activity and the solvency of businesses continued to improve amid the exchange rate trend in April – May 2017 that was favourable for imports. The increase in industrial production volumes in April – May 2017 was driven by growth in most sectors. In May, the growth rates reached 5.3% compared with May 2016, the highest value in recent years. Overall, output volumes increased by 1.7% in January – May 2017 compared with the same period of 2016 (1.1% a year before).

Moderate growth in agriculture, at a level of 0.7% YoY, remained in April to May 2017, without exceeding the 1Q 2017 growth rate. The key factor limiting growth was the weather, which has brought the risk of a poor overall harvest for the current year.

The recovery in economic activity is also evidenced by the freight turnover growth rates, which have reached their highest values for the past six years (9.5% in May 2017 versus May 2016).

The leading indicators calculated by the EEC evidence the continued upward trend in economic growth in early 3Q 2017. The leading indicators were positively affected by expectations of an improvement in the processing industry, oil price movements, and high freight turnover growth.


Modest consumer demand, together with the RUR exchange rate trend and decreased inflation expectations, contributed to the stabilization of annual inflation in April – May 2017 at 4.1%. Some acceleration in food inflation amid weather anomalies in the spring months was noted in May, and was even sharper in June, becoming the key factor behind the acceleration of annual inflation to 4.4%. Weather may continue to impact food prices in the second half of 2017. An additional factor making it tougher to reduce inflation is a possible weakening of the national currency amid resumed volatility in global markets. The government’s moderately tight monetary policy will contribute to keeping inflationary processes within the targets of the Central Bank.

Exchange Rate

The exchange rate trend in 2Q 2017 was mixed. In April – May, the rouble rate was supported by the increased interest of foreign investors in financial assets and significant sales of forex revenue by exporters. The situation somewhat changed in the second half of June, however, after oil prices dropped to their lowest levels this year, another change in interest rates by the Russian Central Bank and the Fed, and the latter’s comments on further monetary policy. The nominal RUR - USD rate weakened in the second half of June, returning to the level of early 2017.

According to provisional Bank of Russia estimates, the country’s current account balance was plus USD 27 billion in January – May 2017, significantly increasing versus USD 16.1 billion the year before. However, the surplus gradually declined in April – May 2017 amid a reduction of the trade surplus caused by the slowing growth in exports, while import growth remained the same. We estimate that the Russian rouble was priced above its equilibrium trajectory in 2Q 2017 (the real effective exchange rate gap is estimated at 5.5%). Therefore, the market situation still favours a moderate weakening in the Russian currency.

The net outflow of capital by the private sector slowed considerably following growth in 1Q 2017, driven by banking sector operations. In May, the net outflow of capital by the private sector dropped to its lowest level this year, to reach USD 1.4 billion (USD 15.4 billion in 1Q 2017).

Fiscal Policy

The additional income driven by oil prices exceeding those built into the budget in January – May 2017 have led to a considerable reduction in the federal budget deficit and, as a result, to a downward revision of the expected full-year deficit, from 3.2% of GDP to 2.1%. As provisionally estimated by the Ministry of Finance, the federal budget posted a deficit of RUR 564 billion in January – May 2017, or 1.7% of GDP (4.3% of GDP in January – May 2016). The latest budget amendments for 2017 include revising the oil price outlook from USD 40 to USD 45.6, which will contribute RUR 1.19 trillion in increased revenues compared with the previous 2017 budget.

Foreign currency purchases by the Ministry of Finance in the domestic market 1 that started in February 2017 had experienced considerable changes by the end of 2Q. Aggregate funds allocated for purchasing foreign currency dropped from RUR 131.1 billion in February to RUR 74.3 million roubles in June, which was primarily driven by the reduction in oil prices. In 2017, according to the Finance Minister2, the volume of additional oil and gas revenues allocated for purchasing foreign currency will be RUR 623 billion.

Against a background of the domestic borrowing program, the volume of domestic public debt for April – May grew by RUR 0.17 trillion (up RUR 0.47 trillion since the beginning of 2017) and reached RUR 8.48 trillion as of early June. External public debt as of early June was USD 48.5 billion, dropping by USD 2 billion for April – May due to the redemption of a forex bond in April.

Monetary Policy

Against a background of stabilized inflationary processes in April – May 2017, the Central Bank reduced the key rate at its meeting on 16 June by 0.25 pp to 9%. This marks the third reduction in the rate since the beginning of the year. Monetary policy remains moderately tight, which will encourage further stabilization of inflationary processes. Monetary conditions may be eased in 2H 2017, depending on whether inflation can be retained within the target level. Against a tougher external background, the Central Bank decided to keep the key rate unchanged at 9.0% in July.

1 Conversion of the additional oil and gas revenues (revenues resulting from Urals oil prices above USD 40 per barrel) and their deposit in the Reserve Fund. Press release of the Russian Ministry of Finance dated 25 January 2017 “On transactions in the domestic forex market”.

2 Report by Finance Minister Anton Siluanov at a government meeting.

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.

St. Petersburg Branch

7 Paradnaya St., Saint Petersburg, 191014, Russian Federation

Moscow Representative Office

Entrance №9, office building №3, 12, Krasnopresnenskaya embankment, Moscow, 123610, Russian Federation