International financial institutions (IFI) are increasing their financing of companies in the Eurasian region, according to a new report from the Eurasian Development Bank (EDB).
From 2008 to 2024, the volume of approved non-sovereign financing (for private sector and state-owned companies without sovereign guarantees) in the region totaled US$74.1 billion, compared to US$146.1 billion for sovereign financing (for governments), the report, titled "Investing in the Future: Projects of International Financial Organizations in Eurasia," reveals.
A sovereign guarantee refers to a state's commitment to ensure the fulfillment of certain obligations or debts, typically in the context of international financial transactions. It provides assurance to lenders and reduces their risks, as the government assumes responsibility for meeting the commitments.
According to the report, Uzbekistan and Kazakhstan were the primary recipients of financing from IFIs in 2022-2024. In Kazakhstan, non-sovereign financing surpassed sovereign funding, reaching US$5.9 billion versus $5.2 billion. Meanwhile, in Uzbekistan, sovereign projects still dominate, with US$11.6 billion in sovereign financing compared to US$3.9 billion for non-sovereign projects.
Tajikistan attracted US$2.5 billion in investments during this period, almost entirely in the form of sovereign-guaranteed capital.
The report also highlights a growing shift towards non-sovereign financing. Ten years ago, non-sovereign projects made up 28% of total IFI investments in the region, but in the past three years, that share has risen to 37%.
Economists at the EDB attribute this growth in demand for non-sovereign financing to the improved economic conditions of the region.
The key investors in non-sovereign financing over this period include the EDB, the European Bank for Reconstruction and Development (EBRD), and the International Finance Corporation (IFC).
The authors of the report note that the wealth of the Eurasian region has significantly increased in recent years. "No country is classified as having low income. Tajikistan, Uzbekistan, and Kyrgyzstan are considered lower-middle-income countries, while others are classified as upper-middle-income (with the exception of Russia, which has a high-income level). This indicates that the region’s need for non-sovereign investments has grown in recent years," the report concludes.
