Dmitry Krasilnikov: Promoting foreign trade by member states is an important objective of EDB project activities
Almaty, 6 March 2014. Multilateral development banks (MDB) can play an important role in the advancement of foreign trade of their member states. Dmitry Krasilnikov, Deputy Chairman of the Management Board at Eurasian Development Bank (EDB), stated this today at the roundtable titled Financial Instruments to Support Foreign Trade of the Member States of the Customs Union and Neighbouring States at the Russian Chamber of Commerce and Industry.
Dmitry Krasilnikov pointed out that the tools to stimulate trade, which are available to MDB, have a number of advantages compared to finance provided by commercial financial institutions, primarily in terms of their cost and the period of finance. In addition, MDB can finance export and import transactions directly or through financial intermediaries — commercial banks.
He gave some examples of direct financing provided to exporters and importers by EDB. In particular, to purchase equipment for a new rolling mill at the Byelorussian Steel Works EDB raised EUR 107.8 million from banks against guarantees provided by SACE and Euler Hermes Deutschland AG export credit agencies.
To stimulate export and import transactions between its member states, in 2010 EDB launched a programme to support trade finance. The current value of the projects covered by this programme is US $145 million. Among the advantages of the programme Dmitry Krasilnikov lists relatively low interest rates, the speed of disbursement after a credit limit is established, and the possibility to diversify clients’ funding base.
He also noted that MDB provide guarantees that cover the commercial and political risks of commercial financial institutions, which take part in the development of foreign trade. As an example, he told about EDB’s project with Kazagrofinance where EDB issued a standby letter of credit to guarantee the repayment of the principal by the Kazakh borrower, who purchased agricultural equipment for its subsequent lease to Kazakh agro-industrial enterprises using a loan from Deere Credit Inc.
Other advantages of MDB include, in the opinion of Dmitry Krasilnikov, the long period of funding (EDB provides investments for ten to fifteen years on average), their status of a preferential creditor, which significantly reduces sovereign risks of the borrower’s country, and the absence of regulatory restrictions, which increase the effective cost of loans from commercial banks, among other factors.
The round table brought together representatives of financial, consulting and insurance companies as well as industrial enterprises from Russia, Belarus, Tajikistan, Uzbekistan, Azerbaijan, Transnistria, Italy and Germany.
Additional Information
Eurasian Development Bank 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 exceeds US $1.5 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. Read more about EDB at https://www.eabr.org
For additional information please contact:
Mikhail Mzareulov,