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European Development Bank has no plans to finance new projects in Russia this year

May 10, 14:10 UTC+3 NICOSIA

Russia’s economic development minister says EBRD serves as instrument of foreign policy

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EBRD President Suma Chakrabarti

EBRD President Suma Chakrabarti

© Tamas Kovacs/MTI via AP

NICOSIA, May 10. /TASS/. The European Bank for Reconstruction and Development (EBRD) does not have plans to finance new projects in the territory of Russia in 2017, EBRD President Suma Chakrabarti said on Wednesday.

"The EBRD does not plan to finance new projects in Russia," Chakrabarti said.

Financial performance and current status of the European Bank for Reconstruction and Development give grounds to doubt that the bank corresponds to the highest AAA rating assigned by rating agencies, Russia’s Minister of Economic Development and EBRD Governor Maxim Oreshkin said.

"Current financial status of the Bank does not deserve the AAA rating. We also stress that we do not intend to participate in additional capitalization of the Bank when it will be needed," the minister said.

The EBRD currently has the AAA credit rating with the stable outlook from S&P, Fitch and Moody’s.

Russia expects significant deterioration in financial metrics of the EBRD in coming years, Oreshkin said.

"The income statement and the accounting balance sheet are always worsening quickly when the political motivation is above the economic one. Therefore we expect the financial status of the bank will go down significantly both in terms of the asset quality and in respect of revenue generating capability," he said.

Russia expects EBRD financial situation to deteriorate in next few years, according to Oreshkin. Russia will focus on work with "depoliticized" development institutions, he added. "We will not participate in any discussions of new projects in Russia and will focus on working with depoliticized development institutions, such as the Asian Infrastructure Investment Bank and the BRICS Bank, along with focusing on quality improvement of our domestic development institutions, such as VEB," Oreshkin said.

Leaving EBRD shareholders is not considered, he said. Russia does not intend to participate in possible additional capitalization of EBRD, the minister said. Russia’s economic development minister says EBRD serves as instrument of foreign policy, he added. 

"Always, when the political motivation takes priority over the economic motivation, profit and loss account and balance sheet deteriorate rapidly. Thus, we expect that in several years the financial situation of the bank will deteriorate significantly both in terms of asset quality and the ability to generate revenue," he said.

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