MDBs reduce finance for CIS countries, including in Central Asia, in Q1 2017

BISHKEK (TCA) — In Q1 2017, multilateral development banks (MDBs) reduced finance for the CIS countries four times compared to Q4 2016 and 1.9 times compared to Q1 2016, according to the review ‘An Overview of Investments by Multilateral Development Banks in Q1 2017 in the CIS Countries’ distributed by Eurasian Development Bank’s (EDB) Strategic and Industrial Research Department.

Overall, in Q1 2017, MDBs approved finance of US $1.05 billion for projects in the CIS countries, including Armenia, Azerbaijan, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan, out of which the private sector accounted for 22% and sovereign finance 78%.

Over the same period, MDBs’ investment finance extended to the CIS countries fell by 3.8 times, to US $231 million, compared to Q4 2016. Four MDBs (EDB, EBRD, EIB and IFC) approved twelve projects. Of these, EDB accounted for the largest portion of funds.

Among the countries, Russia (47%, two projects) and Belarus (18%, two projects) were the main recipients of finance for the private sector. EDB was the main investor in Russia and the EBRD in Belarus. One project was signed in Kazakhstan (US $29 million, 12%).

The World Bank Group (IBRD and IDA), the EFSD and the IDB approved ten projects including special sovereign loans for governments, technical assistance and grants, for a total of US $816 million.

The transport sector was the largest recipient of sovereign finance in the quarter (40%, or US $328.5 million). The respective loan was provided by the IDB to Kazakhstan to reconstruct a motor road between Atyrau and Russia’s border (Astrakhan).

Among the countries, Kazakhstan was the main recipient of sovereign funds from MDBs in the CIS, with US $396 million (48% of the total) provided for transport and social projects. In Uzbekistan, which accounted for 37% of the extended funds, the largest loan was from the IDB in the construction sector (US $300 million). In the Kyrgyz Republic, accounting for 14% of the total, the main investments were from EDB-managed EFSD in the power sector (US $110 million).

Sovereign finance extended by MDBs in Q1 2017 increased by 14% compared to Q4 2016.

EDB experts believe that the decline in finance provided by MDBs for the CIS countries in Q1 2017, compared to Q4 2016, was typical of the beginning of a year due to project preparations on the part of both borrowers and lenders.

The review was prepared based on information published on the official websites of multilateral financial institutions, including the Asian Development Bank (ADB), Eurasian Development Bank (EDB), the Eurasian Fund for Stabilisation and Development (EFSD), the Black Sea Trade and Development Bank (BSTDB), the European Investment Bank (EIB), the Islamic Development Bank (IDB), the Nordic Investment Bank (NIB), the Asian Infrastructure Investment Bank (AIIB), and the World Bank Group comprising the International Finance Corporation (IFC), the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

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. EDB’s charter capital totals US$7 billion. The member states of the Bank are Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan.

Sergey Kwan