AiF Belarus (Minsk): Projects are needed
How does Belarus cooperate with Eurasian Development Bank?
EURASIAN DEVELOPMENT BANK (EDB) WAS ESTABLISHED IN 2006 AND HAS ALREADY BECOME A RECOGNISED FINANCIAL INSTITUTION SPECIALISING IN REGIONAL INTEGRATION. BELARUS BECAME A FULL MEMBER OF THE BANK IN 2010. NOW IT CAN ATTRACT BENEFICIAL INVESTMENT IN TRANSPORT, ENERGY AND MUNICIPAL INFRASTRUCTURE AND PARTNER IN MULTILATERAL PROJECTS. AIF ANALYSED THE BANK'S ROLE IN BELARUS AND ITS STRATEGY OR FUTURE OPERATIONS IN PARTNERING COUNTRIES.
Investment
The Bank finances investment projects in the member states for a total of more than US $5.3 billion. At present, Belarus accounts for more than 18% of funds extended by the Bank. According to Dmitry PANKIN, Chairman of the Management Board at Eurasian Development Bank, the institution has fifteen investment projects in Belarus. The most important among them, in Mr Pankin's opinion, are the construction of the Polotsk HPP, the construction of a hotel in Minsk, the financing of production of freight rail cars and tank containers, and the upgrade of a production facility at the Minsk Electrotechnical Plant.
The Bank's projects in the financial sector include loan facilities for the financing of small and medium-sized businesses, agricultural development, and energy efficiency.
The EDB Media Service states that from the beginning of its operations in the country the Bank has fulfilled 18 projects worth approximately US $738.8 million, including eight projects in the real sector and ten in the finance sector.
EDB manages the resources of the Eurasian Fund for Stabilisation and Development (EFSD; formerly, the EurAsEC Anti-Crisis Fund (ACF)). Belarus has received several loans from the EFSD. Mr Pankin confirmed that Belarus was a responsible and reliable credit partner. The Belarusian side had no delayed payments on the credit provided by the ACF.
In early 2015, Belarus applied for a new US $3 billion credit. In the beginning of the year the EFSD informed that it was preparing its opinion on Belarus' application. "The current task is to analyse the conditions set when the previous credit was provided. These include macroeconomics and monetary policy measures. We need to understand which of these conditions remain relevant and where the parties' positions can be converged," said Mr Pankin during his visit to Minsk on 13 August 2015.
Projects
In accordance with the EDB Strategy for 2013-2017 approved by its Council on 2 July 2014, the Bank will aim its work at enhancing the results achieved and improving the effectiveness of operations, taking into account the activation of integration processes.
However, Dmitry Pankin believes that the time has come to analyse certain issues and understand whether the Bank moves in the right direction. The member countries have different opinions on the outcomes of their participation in EDB. The relatively small economies of Belarus and Armenia, for example, receive a fair bit of investment bonuses from EDB. At the same time, the Bank's role in lending for Russia and Kazakhstan is less significant.
"Here comes the question of what and how we should change in EDB operations so that it does not only provide loans for "good projects" and "outstanding enterprises," but perform special, specific tasks of a development bank. This is the key question we should answer," Mr Pankin is convinced.
The future
A development bank is an institution expected to deal with issues, which cannot be solve for various reasons by governmental authorities or businesses. EDB projects serve public interests. They are initiatives commercial banks cannot work with because of their specifics. These include infrastructure, transport, electric power and communications projects.
Dmitry Pankin states that the Bank has money and what it needs are worthwhile projects it will be ready to engage in. According to the Chairman of EDB, the Bank will focus on investment in programmes and ideas, which meet the interests of several member states at once. An example of such project is the construction of an assembling plant in Kazakhstan, which will use components from Belarus and Russia. A number of joint projects with the participation of Belarus are being considered at the moment.
In addition, Mr Pankin believes that previous development models for Belarus, Kazakhstan and Russia, which had some significant results, have run out of steam. Their further development is almost impossible without consistent structural reforms, the transition to a strategy of innovations, diversification and the enhancement of exports, and the improvement of domestic demand. For this reason a new development model is being devised to boost economic growth in each of the countries of the Eurasian Economic Union.
ADDITIONAL INFORMATION
Eurasian Development Bank is an international financial institution established by Russia and Kazakhstan in January 2006. The Bank is headquartered in Almaty. Its main objective is to promote market economy in the member states, their stable economic growth and the expansion of mutual trade and other economic ties. Other member states of the Bank are Armenia, Belarus, the Kyrgyz Republic and Tajikistan.
BY THE WAY
The priority tasks of EDB are to attract new member states, finance investment projects with an integration effect, provide technical assistance for projects with an integration effect, conduct research into economic integration, and ensure a balanced diversification of the investment portfolio by regions of the member states. EDB pays special attention to cooperation with the UN, the Eurasian Economic Commission and the CIS.
The Bank's charter capital totals US $7 billion, including US $1.5 billion of paid-in capital and US $5.5 billion of callable capital.