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Igor Finogenov


Main Effect

Chairman of the Executive Board, Eurasian Development Bank


Igor Finogenov graduated from the Leningrad Shipbuilding Institute and the USSR Academy of Foreign Trade before completing a training course for top executives at Harvard Business School. From 2000-2005 he was President and Chairman of the Executive Board of NOMOS-BANK. In 2005, he was appointed Assistant to the Minister of Finance of the Russian Federation. On June 16, 2006 he was appointed Chairman of the Executive Board of the EDB.

TBY talks to Igor Finogenov, Chairman of the Executive Board of the Eurasian Development Bank, on the main areas of investment and the prospects for regional economic integration.

What prospects does the bank see in Eurasian economic integration?

Centrifugal tendencies in the development of newly independent states’ economic systems are expressed in member countries of the Customs Union (CU) of Russia, Belarus, and Kazakhstan, which began operating in 2010. Since January 1, 2012, the first 17 agreements that form the basis of the Common Economic Space (CES) have come into force. These agreements regulate the number of key themes of economic convergence—from the coordination of macroeconomic policies to labor migration. The results of complex simulations demonstrate that the creation of the CES by Russia, Kazakhstan, and Belarus will have a positive impact on the development of the three countries. In terms of figures, based upon a complex assessment conducted by the EDB’s Center for Integration Studies together with Russian and Ukrainian academics, the aggregate accumulated effect of the establishment of the CES may amount to $1 trillion (in 2010 prices). The effects may be distributed among the countries as follows: 15% additional GDP growth for Belarus, 6% for Ukraine, 3.5% for Kazakhstan, and 2% for Russia. The main benefits from integration will be gained by Belarus, Ukraine, and Kazakhstan in per capita terms. Russia will benefit from integration in absolute values. The maximum integration effect is possible in the technology-oriented sectors. Industrial cooperation in the sectors of aerospace, shipbuilding, and nuclear power plant engineering is based on both old Soviet ties and relations established within the CU and the CES. However, we should understand that integration is not a computer algorithm that results in success automatically. Immediate effects based upon the liquidation of tariff barriers are insignificant—the main effect is attainable from a long-term perspective, with specific initiatives and projects in high-tech industries subject to positive changes and major transnational holdings making a claim for global leadership in their sectors. Integration agreements will broaden the possibilities. However, these possibilities should be translated into action.

In 2011, the EDB’s investment portfolio increased by 32.7%. In which areas have you observed the largest increase?

We signed 18 new projects in 2011. Most of them are being implemented in the following sectors: transportation and transport infrastructure, chemicals, petrochemicals and fertilizers, metallurgy, municipal infrastructure, energy, mining and processing, agriculture, and finance. In general, in 2011 the investment portfolio grew by $843 million. Now, the current investment portfolio is more diversified in terms of sectorial distribution. New projects have increased the share of many industries in the portfolio, such as transportation, metallurgy, and chemicals. In 2011, the Kazakhstani economy showed robust growth—GDP rose by 7.5% after increasing by 7.3% in 2010. Throughout 2011, the main drivers of economic growth have been domestic consumer demand and external demand for Kazakhstan’s raw materials. Retail turnover increased by 12.5%, and industrial output grew by 3.5%. Despite the fact that the industrial sector increased its output in 2011, the growth rate slowed to 3.5%, from 10% in 2010. This was caused primarily by a decrease in oil production. Due to the low 2010 level caused by unfavorable weather conditions, agricultural output rose by 26.7% in 2011 and compensated for the decrease in industrial output. Due to favorable terms of international trade, exports outpaced imports. According to the National Bank of Kazakhstan, there was an export surplus that outpaced the similar figure of 2010 by four times. Export revenues also generated a significant surplus in Kazakhstan’s consolidated budget (10.3% of GDP compared with 8% in 2010).

The modernization component is a priority element of the bank’s decisions. In which direction are you looking to take this initiative in your medium-term agenda?

Our main priorities are to finance projects that are based on modern technology and innovations, as well as abiding by ecological principles. We will continue to support energy-saving projects, such as Nitol in Russia or Kazfrac in Kazakhstan. The first develops alternative solar battery technology, and the second implements an innovative approach for the utilization and recirculation of excess gas. The EDB is interested in taking part in large hydropower projects in Central Asia, as well as in the development of energy infrastructure in the region. Kazakhstan also demonstrates its consistent attention to these areas. However, it is a complex issue. The majority of hydropower capacity of the Syr-Darya and Amu-Darya rivers is underutilized. According to the most moderate estimations, the potential annual hydropower capacity of these rivers is above 400 billion kV per hour. Therefore, the bank cautiously analyzes and seeks mutually acceptable approaches to these issues. The bank also sees opportunities in the development of transportation infrastructure.



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