Chairman of the Management Board at EDB: “We don’t plan any cardinal changes at the Bank in the near future”
Moscow, 24 February 2015. The main objective today is to work closely with the founders and members of Eurasian Development Bank (EDB) in order to clearly understand their expectations of the Bank and their view of how it performs. Dmitry Pankin, Chairman of the Management Board at EDB, said this today during a press briefing. “This will be the basis for us to decide, in which strategic tasks of the countries and the region as a whole EDB should take part, and what are the specific features of the projects it should finance,” he said.
“I plan to visit all the EDB member states and have meetings at ministries and other institutions to find out what they expect of the Bank,” Dmitry Pankin continued. “This will help us select projects, which are of interest not only to certain countries, but to many members of the Bank.”
Dmitry Pankin pointed out that EDB has an approved medium-term strategy, but it “needs to be revised and carefully adjusted to take into account the priorities of development, which are truly important to the Bank’s members.” “The investment policy of the Bank won’t change at once, as well as the industrial and country structure of its work,” Dmitry Pankin emphasised. “However when we determine more clearly the priorities of our member countries, this will inevitably result in changes in our project work and country strategies.” “I plan that the new strategy will be developed before the end of this year,” he said.
According to the head of the Bank, EDB is strongly involved in rail projects in its member states, primarily in transport engineering. He mentioned, in particular, that the Bank took part in the construction of the Tikhvin Freight Car Building Plant and the Osipovichi Wagon Works in Russia and Belarus, respectively. “However the Bank should be a more proactive player in building railroads in Russia and other countries,” the Chairman said. “This is where our project work as of an international development bank is important.” He emphasised that such projects are only possible for the Bank if they ensure payback and return on loans.
In his answer to the question about Russia’s lowered credit ratings, Dmitry Pankin stressed that this had not affected the Bank yet, but, should this happen, the cost of its finance would inevitably grow. “The question is whether it is possible for us to prove that our rating can be higher than that of our founders,” he said.
Dmitry Pankin continued that, in the context of “expensive money,” the Bank searched for possibility to provide its clients with accessible finance. He believes that EDB’s participation in the Programme for Supporting Investment Projects, which are being implemented in Russia, based on project finance, is a promising undertaking. EDB and other lenders were selected as participants in this programme. The Bank will be able to count on the provision of long-term finance from the state and invest it in projects, which are priorities for the Russian economy. The Bank is already working on two such projects, one in the transport sector and one in the ferrous metallurgy sector.
Dmitry Pankin made a special mention that businesses in EDB member states, and in Kazakhstan in the first place, are very interested in receiving loans in the national currencies. “It is more difficult to find a project today, where investors would prefer to get loans in the dollars,” he said. The head of EDB also noted in this connection that, although the Bank provides loans in two national currencies — the roubles and the tenge — and that the issue of providing loans in the currencies of other member states of the Bank is an interesting one, the most pressing issue today is about hedging foreign exchange risks.
The Chairman said that he welcomed partnerships with other development institutions, in the area of both project activities and the exchange of experience and information. In particular, he told journalists about EDB and Vnesheconombank’s successful co-financing of a number of projects in Russia and Kazakhstan. “It would be interesting to EDB to cooperate with new international structures such as the BRICS Development Bank and the Asian Infrastructure Investment Bank, taking into account their significant resources for investment,” he added.
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As regards the possible creation of a SCO Bank on the basis of EDB, Dmitry Pankin said that this could happen if “the economic efficiency of this decision is proven, the existing concerns are overcome, and a consensus is reached among the SCO countries.”
Additional Information
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. 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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