The World Bank
The Russian Federation joined the World Bank (IBRD and IDA) in 1992. The Bank has provided financing for 70 projects in different sectors totaling slightly over US$10.5 billion in IBRD loans. About 95 percent of the total portfolio has already been disbursed.
The current IBRD portfolio consists of 10 projects with a total current commitment of US$668.3 million (as of October 2015). All of the Bank’s financing to Russia is currently provided in the form of investment project financing. Reimbursable Advisory Services (RAS) show steady demand, with continued interest from the regions and growing demand from the federal government.
Portfolio quality is satisfactory. Several projects hold moderately satisfactory ratings for implementation progress. Two of these projects, namely, the Forest Fire Response Management Project and the Second National Hydromet Modernization Project, are being closely monitored, as there are significant delays in implementation. The Judicial Reform Support Project went through two intensive restructurings and has been upgraded to satisfactory. The current disbursement ratio is around 2.4 percent. The average project age is 6.26 years, attributable to the fact that the majority of the projects are designed as five-year investment operations.
Advisory Services and Analytics (ASA) remain an important part of IBRD’s engagement in Russia. In close cooperation with the Government, ASA products are helping to modernize public finance and administration and improve social service delivery and the investment climate. The Bank expanded its technical assistance to areas of early childhood development and social development, such as technical assistance on indigenous people and social accountability. In FY16, along with two traditional flagship Russia Economic Reports, the World Bank plans to release a study on “Connectivity and Inclusive Growth in Russia.”
In October 2014, the World Bank and IFC presented “Doing Business 2015: Going beyond Efficiency.” The report found that the Russian Federation has made starting a business easier by eliminating the requirement to deposit the charter capital before company registration as well as the requirement to notify tax authorities of the opening of a bank account—a reform applying to both Moscow and St. Petersburg. In addition, it made transferring property easier by eliminating the requirement for notarization and introducing tighter time limits for completing property registration. This reform also applies to both Moscow and St. Petersburg. Russia’s ease of doing business ranking in Doing Business 2015 was 62, and its 2014 back-calculated ranking was 64. Its distance to frontier score in Doing Business 2015 was 66.7, and the 2014 back-calculated score was 65.0, with an improvement of 1.6.
Demand has grown rapidly for RAS. Since 2007, the World Bank has entered into more than 80 RAS. Agreements cover a wide range of activities that are well aligned with Russia’s development challenges. RAS are also of increasing importance for Russia’s regions, as more than 30 of Russia’s subnational governments have signed at least one RAS with the World Bank (15 currently active in nine different regions).
Innovative RAS products allow the World Bank Group to build and keep a lead in global knowledge provision. One of the areas of early demand for RAS was in support of a large-scale infrastructure project in which the World Bank Group advisory services supported the St. Petersburg Pulkovo airport expansion based on a PPP. Pulkovo attracted more than €1.2 billion in private investments and was awarded the title of “Global PPP Deal of the Year” by Infrastructure Investors in 2011. As international experience and analytical components are often critical success factors for education, health, and social protection, demand from clients has led to the widespread use of RAS in associated global practices as well. During the past two years, RAS are also in demand for improving the investment climate, providing economic policy advice, and bolstering the local initiatives support program.
International Finance Corporation
Russia became an IFC member in 1993. Since then, IFC’s long-term investments in Russia have totaled US$10 billion, including US$3.5 billion in syndicated loans across 263 projects. As of September 2015, IFC’s current committed investment portfolio in Russia was US$1.5 billion in about 70 projects with roughly 50 clients.
In line with the World Bank Group CPS, IFC continues to support economic diversification and growth in Russia by helping its private sector clients realize long-term development potential, with a particular focus on maximizing impact in less-developed regions. These efforts include the creation of new high-skilled jobs; the expansion of high value-added manufacturing; and the improvement of transport and social infrastructure to provide people and companies with better access to goods and services. In addition, IFC provides Russian companies and banks with strategic advice on achieving long-term sustainable growth, increasing energy and resource efficiency, and improving corporate governance, and also advises Russian regions on structuring municipal infrastructure projects.
Multilateral Investment Guarantee Agency
MIGA’s gross exposure in Russia was US$705 million as of September 2015 (with a net exposure, after reinsurance, of roughly US$381 million) in eight active contracts (seven projects)—MIGA’s fourth-largest net exposure. In dollar terms, MIGA’s exposure is heavily concentrated in Russia’s financial institutions, including the country’s banking, mortgage, and leasing subsidiaries. Projects in the manufacturing, services, and infrastructure sectors are also covered by MIGA’s programs. MIGA offers several traditional political risk insurance products that cover the following risks: Transfer Restriction and Convertibility, Expropriation and Breach of Contract, and War and Civil Disturbance, as well as their new product covering the risk Non-Honoring of Financial Obligations by a State-Owned Enterprise.
Last Updated: Oct 05, 2015