Kazakhstan is going to increase its stake in the Eurasian Development Bank (EDB) by 12.71% up to 50%, according to Minister of Finance Yerulan Zhamaubayev.
In January 2023, Kazakhstan acquired a 4.29% stake in EDB from Russia for about $44.9 million. As a result, Kazakhstan’s stake has increased from 33% to 37.2%. At the time Zhamaubayev said that the exact sum of the deal would be available once the 2024 budget is done. He also noted that the government would pay in installments of five million a year to reduce the burden on the state budget.
«We are expecting that we will increase our stake further to 50%. This is necessary in order to guarantee more projects with funds,» the minister highlighted.
In response to the question about EBD’s blocked assets, Zhamaubayev said that the government didn’t know about that when it started negotiations with Russia last year.
«Indeed, some of the bank’s assets are frozen but we are looking for a solution. The point is to find the right position for the negotiation because there are no sanctions against the bank itself. The problem is that some of its assets are blocked,» he underlined.
In 2022, the EU froze $400 million controlled by EDB as a part of its anti-Russian sanctions.
According to EDB’s books, as of December 2022, the entity had $427.14 million in cash and credits in its portfolio. At the time, the freezing of the bank’s assets caused damage of $51.4 million. On January 7, 2023, the EDB officially requested authorized bodies in Belgium and Luxembourg to lift sanctions from the bank’s assets.
According to Zhamaubayev, the total amount of restricted assets may be about $700 million. Now, the country’s government has to persuade the EU that this money is meant to be spent on various projects within Kazakhstan.
This year, EDB is going to allocate roughly $2 billion for a range of projects in Kazakhstan, the ministry reported. On the other hand, Nikolay Podguzov, head of the bank, said that the EDB is planning to invest $1.1 billion in Kazakhstan and facilitate «the inflow on international investments in Kazakhstani projects.»
«Despite frozen assets, EDB is operating as usual in order to avoid any negative connotations that may be around. More than 40% of investment projects supported by the banks are implemented in Kazakhstan. Therefore, we are asking our European counterparts to roll these restrictions back and let money into Kazakhstan,» Zhamaubayev stated.
However, he refused to give any details about projects to avoid making the situation even worse. The minister said that it is necessary to wait for the end of the negotiations.
In August 2022, Bloomberg reported that Russia was going to drop its controlling stake in EDB to mitigate the risk of sanctions for the entity. This was the very first report about the move. Later, Zhamaubayev, Kazakhstan’s finance minister, confirmed that Kazakhstan would purchase part of the Russian stake in the bank.
Previously, Russia controlled 65.97 shares of EDB. In January 2023, this stake decreased by 21.19% to 44.79% when the EDB board approved the redistribution of the bank’s registered capital between its member states. The remaining shares were redistributed among other shareholders. As a result, Kazakhstan has increased its stake in EDB from 32.99% to 37.29%, Belarus from 0.99% to 5.21%, Tajikistan from 0.03% to 4.26% and Armenia and Kyrgyzstan from 0.01% to 4.23% each, respectively.
The EDB is an international financial organization established with the purpose of financing infrastructural projects in Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. Transport infrastructure and logistics, production industry, agriculture, green energy and water resources are the top priorities for the institute. The EDB was established on January 12, 2006, and is headquartered in Almaty. Its registered capital is about $7 billion. The bank’s management board consists of nine people including three managers from Kazakhstan: Ruslan Dalenov, Daniyar Imangaliyev and Berik Mukhambetzhanov.
In Kazakhstan, EDB has been supporting several projects in the sphere of wind and solar energy and also actively participates in the development of green finance. According to Ruslan Dalenov, in 2022, the bank invested about $1.2 billion in Kazakhstan, a fivefold increase over 2021. It is planning to invest an additional $3.8 billion by 2026. Over the past 17 years, Kazakhstan implemented 103 projects worth $5 billion with the help of EDB.
