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EEF 2019 Visiting Session Participants Discuss International Financial Organizations’ Contribution to Far East Development in Yakutsk

30 July 2019
Участники выездной сессии ВЭФ-2019 в Якутске обсудили вклад международных финансовых организаций в развитие Дальнего Востока

The 5th Eastern Economic Forum held a visiting session in Yakutsk. The event was attended by representatives of Russia’s federal ministries and departments, regions of the Far East, the business community as well as international financial and consulting organizations. The participants discussed the feasibility of development banks providing lending to the regions of the Russian Far East and prospects for the implementation of investment projects with the involvement of international financial organizations (IFIs).

The central event of the visiting session was a panel discussion on the contribution of IFIs to the development of the Russian Far East.

The session participants discussed existing mechanisms and problematic issues related to the implementation of investment projects in Far Eastern regions with the involvement of IFIs as well as ways to enhance the efficiency of interaction between the regions and IFI representatives through the Russian Ministry of Finance.

They cited the experience of Yakutia as a positive example of cooperation between the Far East and IFIs. Of particular note was the experience the region gained from the construction of water intake and water treatment facilities in the city of Yakutsk, which was financed by the European Bank for Reconstruction and Development, VTB Bank, and the Eurasian Development Bank.

Head of Yakutia Aisen Nikolayev noted that the rapid development of the Far East requires huge investments that cannot be provided from federal and regional budgets alone. «Developing the Russian Far East has been identified as a priority for the country throughout the entire 21st century. A rather large amount of financial resources is needed to achieve the objectives we have set. Financial resources need to start being raised today for the construction of infrastructural, social, transport, and energy facilities. And we should attract funds from international financial organizations specifically to meet these objectives. The cost of debt capital will be much lower if the funds of IFI are used», Nikolayev said.

In order to meet the strategic challenges facing the Far East, Nikolayev said improvements need to be made to federal budget legislation, which is currently hampering the implementation of investment projects that use the funds of IFIs. «At the same time, we understand that IFIs should only provide lending for projects which have undergone regional and federal expert evaluations and in which federal development institutions — the Far East Development Corporation, the Far East and Baikal Region Development Fund, and others — have announced they will participate. I am certain that today’s discussions on this issue will contribute to the development of the economy of the republic and the entire Far East», Nikolayev said.

Deputy Director of the Primorsky Territory’s Department of Economics and Business Development Victoria Ivacheva noted that the regions of the Far East should work constructively when finding solutions to the most important issues that directly affect the development of the regional economy. «Uniform conditions should be created for the entire Far East to attract foreign investment and cooperate with IFIs. Only then will we be able to achieve noticeable results», Ivacheva said.

Manabu said JBIC is unable to directly fund a number of infrastructure projects in Yakutia due to shortcomings in federal budget legislation. «There is enormous potential for cooperation with Yakutia, but in order to implement investment projects we have to finance these projects through other banking structures, and this increases the cost of the project itself», Manabu said.

The discussion on the role of IFIs in the development of the Russian Far East will continue during the fifth Eastern Economic Forum in Vladivostok on 4–6 September.