Sept. 1 – The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, may invest US$1.1 billion to US$1.2 billion in the Russian economy in the current fiscal year which has begun July, 2010, IFC Vice President for Global Industries Jyrki Koskelo said in an interview with the Russian News agency RIA Novosti on Monday.
“We may allocate as much funds as we did during the last fiscal year in Russian projects. The most likely figure will be US$1.2 billion,” Koskelo said.
According to him, half of last year’s investments in Russia have been mobilized from international financial institutions and private sector partners. This year, IFC also plans to mobilize about 50 percent of investments from international financial institutions.
IFC will contribute up to US$1.55 billion to the Debt and Asset Recovery Program over three years and expects additional funding from other international financial institutions.
Koskelo has noticed that about 80 percent of investments will be directed on complex projects to improve the efficiency of country energy systems.
The IFC official also said that the corporation plans additional capitalization of banks and, in return, they will credit the country’s small businesses. “This type of enterprises will provide Russians with new workplaces in the future,” Koskelo said.
Earlier this summer, IFC announced that it will partner with Germany’s EOS Group to address the growing problem of nonperforming loans in Central and Eastern Europe, including the Russian federation, and help restore lending to businesses and consumers.
“EOS and IFC have earmarked close to US$100 million to co-finance the acquisition and resolution of distressed debt. Over a period of three years, IFC and EOS expect to resolve nonperforming debt with a face value of up to US$2 billion. Activities initially will focus on Russia where nonperforming loans are valued at about US$50 billion. IFC and EOS have agreed to jointly invest in consumer debts in Russia and assets will be managed by the local EOS subsidiary. The co-investment program is expected to expand to other markets in the region,” a corporation press release said.
In April 2010, IFC together with the European Bank for Reconstruction and Development jointly raised €200 million from a group of eight commercial banks for the reconstruction and expansion of St. Petersburg’s Pulkovo Airport.
At present, Russia is the second largest country in IFC’s global portfolio, with a total committed portfolio of US$2.4 billion.
IFC investments also addressed a number of regional priorities this year. Highlights include: banking, telecommunications, mining, tourism, construction, transportation, horticulture, and energy.
