Eurasian Development Bank

Eurasian Development Bank
Formation 12 January 2006
Type International organization
Legal status Treaty
Purpose Crediting
Headquarters Almaty, Kazakhstan
Region served
Eurasia
Membership
6 countries
Website http://www.eabr.org

The Eurasian Development Bank (EDB) is a regional development bank established by the Russian Federation and the Republic of Kazakhstan in  2006. The Bank currently has six member states, including Armenia, Belarus, Kyrgyzstan and Tajikistan. Other states and international organisations are able to become members by signing up to the Bank’s founding Agreement.

History and functions

EDB was founded on the initiative of the Presidents of Russia and Kazakhstan formalised by the signing of an International Agreement on 12 January 2006.

The Bank began operating in June 2006 when laws ratifying the Agreement came into force. Armenia and Tajikistan joined EDB in 2009, Belarus in 2010, and Kyrgyzstan in 2011.

The Bank's mission is to facilitate, through its investment activity, the development of market economies, economic growth and the expansion of trade and other economic ties in its member states.

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. The member states hold the following shares in the Bank’s capital: the Russian Federation 65.97%, the Republic of Kazakhstan 32.99%, the Republic of Belarus 0.99%, the Republic of Tajikistan 0.03%, the Republic of Armenia 0.01%, and the Kyrgyz Republic 0.01%.

EDB’s operations are governed by international law. As such the Bank:

The Bank’s headquarters is located in Almaty, Kazakhstan.

EDB has a branch in St. Petersburg and representative offices in Astana, Bishkek, Dushanbe, Yerevan, Minsk, and Moscow.

The Bank has the status of an international organisation. In January 2013, the Organisation for Economic Cooperation and Development (OECD) recognised EDB as a multilateral financial institution with risk classification 3 and buyer risk classification SOV/CC0.

EDB has had observer status at:

EDB is:

Strategy

Under EDB’s Strategy for 2013–2017, approved by the EDB Council on 2 July 2014, EDB aims to build on the success it has achieved so far and to enhance its role in furthering the process of integration in the region.

The creation and enhancement of the Customs Union and Single Economic Space pose significant challenges for the Bank, but in addressing such challenges the Bank aims to promote deeper economic cooperation between its member states.

The Bank is focusing its efforts in the following areas:

EDB key performance indicators for 2013–2017:

The investment portfolio will have the following breakdown by sectors to promote the Bank’s strategic and sector priorities (the percentage provided is the maximum share of the sector in the current investment portfolio):

The Bank identifies the priority sectors for each member country according to the needs of their economies and the areas in which they need to become more competitive. Priorities must also take account of the Bank’s resources. Goals must be relevant and achievable for each country with support from the Bank.

Activities

Investment operations

The Bank invests in major medium- and long-term projects. As a rule, the minimum cost of the projects that are considered is US $30 million, with a maximum repayment period of 15 years.

The completed investment projects include:

As of 1 January 2015, the Bank’s current investment portfolio totalled around US $3,16 billion. The share of projects with an integration effect in the Bank’s current investment portfolio exceeded 49%.

EDB has 88 investment projects under implementation, including:

In acknowledging that the banking system is the infrastructural and institutional foundation of the market economy, the Bank is implementing special programmes to provide targeted loan facilities to financial institutions in its member states:

Since 2010, EDB has been a contributor to the Macquarie Renaissance Infrastructure Fund (MRIF). The MRIF totals US $630 million, in which EDB’s investment is US $102 million. The Fund’s other investors include the International Finance Corporation, European Bank for Reconstruction and Development, Russian State Bank for Development and Foreign Economic Affairs (Vnesheconombank), Kazakhstan’s Кazyna Capital Management, Macquarie Capital Group and Renaissance Capital. MRIF is intended to support the implementation of infrastructure projects in CIS countries, including in priority regions of these countries. MRIF focuses on investing in projects in the power generation sector (including generation, distribution and heat networks), transport and communication (including toll roads, railway and accompanying infrastructure, sea ports, airports and car parks) and the utilities sector (including water, gas supply, sewage, and social infrastructure).

Managing the Eurasian Fund for Stabilization and Development

Main article: EurAsEC Anti-Crisis Fund

The EurAsEC Anti-Crisis Fund (ACF) totalling US $8.513 billion was established by the governments of six countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. The ACF’s main goals are to help its member countries mitigate the negative effects of the global financial crisis, to ensure their long-term economic and financial stability, and to foster integration (for more information visit http://acf.eabr.org/e).

In June 2009, the ACF member states appointed EDB the manager of the Fund. As the ACF manager, EDB prepares and implements the Fund’s programme.

In June 2015 ACF was renamed as the Eurasian Fund for Stabilization and Development (EFSD). The Fund has been renamed because of the abolishment of the EurAsEC as a result of the establishment of the Eurasian Economic Union (EAEU).

The Fund has two instruments at its disposal:

In addition to financial and investment credits, it can provide grants to its member states.

In 2010-2011, the Fund authorised financial credit for Tajikistan (US$70 million) and Belarus (US$3 billion). To date US $2.63 billion has been disbursed under these loans.

In December 2013 the Fund’s Council approved the financing for two investment projects in the Kyrgyz Republic:

EDB and the Kyrgyz Republic signed agreements to finance these projects in March 2014.

In July 2014 the Fund’s Council decided to provide a US $150 million investment credit to Armenia to finance the construction of the North-South road corridor (Phase 4). In April 2015 the Bank and the Republic of Armenia signed an agreement to finance this project.

In addition, the Fund’s Council approved blueprints for four projects:

Technical assistance

In 2008, the Bank established a Technical Assistance Fund (TAF) to provide financial support for pre-investment and innovation research at the international, national and sector levels, aimed at deepening Eurasian integration, strengthening market infrastructure and promoting sustainable economic growth in its member states.

The TAF implements the following programmes:

The TAF portfolio includes 57 projects and has a total value of about US $6.5 million.

Research

EDB’s Strategy and Research Department:

The deepening and widening of integration in Eurasia made possible by the establishment of the Customs Union and the Single Economic Space by Belarus, Kazakhstan and Russia are processes that require comprehensive analysis. EDB established the Centre for Integration Studies in 2011 to provide this analysis. The Centre carries out research and drafts reports and recommendations for EDB’s member-state Governments. It also hosts round tables and expert group meetings on a wide range of issues concerning regional economic integration. The results of the Centre’s work can be found in a number of publications, in particular its series of Reports, the Journal for Eurasian Integration, the Eurasian Integration Yearbook, various papers and monographs. The Centre for Integration Studies leads work on a number of large-scale permanent projects, in particular the System of Indicators of Eurasian Integration, Monitoring of Mutual Investments in the CIS, and the Integration Barometer.r

Mobilisation of financial resources

EDB works with financial institutions worldwide to mobilise long-term finance in capital markets, which are the main source of financing for the Bank’s investment activities. The fundraising instruments include:

The Bank has credit ratings from international rating agencies: Standard & Poor's (ВВВ/negative) and Moody's Investors Service (А3/stable).

International cooperation

EDB focuses on cooperation with the UN and its specialised agencies, the Eurasian Economic Commission (EEC) and CIS.

The Bank attends meetings of the Heads of Governments of the CIS and sessions of the CIS Economic Council. EDB representatives are involved in the EDB member states’ intergovernmental commissions for trade and economic cooperation.

EDB is developing its cooperation with UN organisations, including the UN Economic Commission for Europe (ECE), the UN Development Programme (UNDP), the UN Trade and Development Board (UNCTAD) and the UN Economic and Social Commission for Asia and the Pacific (ESCAP).

EDB also works with the Interbank Association (IA) of the Shanghai Cooperation Organisation (SCO).

EDB cooperates with many international development institutions on project co-financing, information exchange and the introduction of best international practice in corporate governance. Partners include the World Bank, the International Finance Corporation and Asian Development Bank.

In January 2014, EDB became an institutional member of the World Economic Forum.

Environmental and social responsibility

In all its activities, EDB upholds the principles of social and environmental responsibility and strives to improve the efficient use of natural resources, environmental protection, and sustainable socioeconomic development generally.

In all its activities, and especially in assessing its investment projects, the Bank takes a comprehensive approach to the resolution of environmental and social issues. The Bank’s efforts to mitigate and remedy adverse environmental and social impacts informed the Bank’s Environmental and Social Responsibility Policy which was adopted by the Management Board in 2012.

The Bank will only extend finance to projects which do not significantly degrade the environment or the social wellbeing and living conditions of local people. The Bank’s investments should indeed improve living standards, employment and social security. Improving the efficient of use of natural resources is also a very important objective.

The Bank strives to avoid or mitigate the adverse environmental or social effects of the projects it supports and to ensure that they contribute to the sustainable development of its member states.

The Bank does not finance activities involving forced or child labour, the manufacture or distribution of tobacco or alcohol products, gambling, the manufacture of or trade in weapons and ammunition and other activities prohibited by the laws of its member states or international conventions on the protection of biodiversity and cultural heritage, as well as other types of activities restricted by resolutions of the Management Board and/or the Bank’s Council.

In 2012, the Bank joined the Multilateral Financial Institutions Working Group on Environment.

Management

The Bank’s management comprises the Bank’s Council, the Management Board, and the Chairman of the Management Board.

The Bank’s Council is its highest overall management body. Each member state of the Bank appoints one authorised representative to the Council and a deputy become the Council members. The Council meets when required, and at least twice a year.

The members of the Bank’s Council are:

The Bank’s Management Board is a permanent executive authority. Its activities are governed by the Bank’s Council.

The Chairman of EDB's Management Board is Dmitriy Pankin.[1]

References

  1. 1 2 3 4 "Company Overview of Eurasian Development Bank". Bloomberg BusinessWeek. Retrieved 25 March 2014.
  2. ↑ "Company Overview of Asian Development Bank - Olga Vladimirovna Lavrova". Bloomberg NewsWeek. Retrieved 25 March 2014.

See also

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