EAEU to launch financing mechanism for industrial cooperation projects

The Russian authorities are preparing to ratify the changes being made to the Treaty on the Eurasian Economic Union to launch joint industrial projects of the five countries. After the amendments are approved, such projects will have access to concessional financing through equity contributions received by the budgets of the EAEU states from the collection of fees. In five years, the new mechanism will make it possible to finance joint projects worth up to $1 billion. Its practical part is still being developed – Russian business is counting on participation in this work, as well as equal access to the tool for all interested parties, the RSPP says.

The Ministry of Industry and Trade published on regulation.gov.ru a draft law on the ratification of amendments to the Treaty on the Eurasian Economic Union. We are talking about creating mechanisms for financing industrial cooperation projects. These amendments were agreed upon by the heads of the EAEU states at a meeting of the Supreme Eurasian Economic Council on May 25. The Eurasian Economic Commission will receive new powers for preferential financing of integration investment projects from the EAEU budget. We are talking about the possibility of subsidizing the interest rate on loans for the implementation of promising projects in the real sector – companies from at least three countries of the union must participate in such projects.

The mechanism of financial support for projects is designed for five years with the possibility of its extension. In the event of its termination, the EAEU countries are obliged to ensure the fulfillment of financial obligations in full during the entire period of implementation of the selected projects. The annual amount of funds to support initiatives will be determined as a percentage of the total amount of revenues to the budgets of the EAEU states from special, anti-dumping and countervailing duties. The EEC expects that the mechanism will start working at the supranational level from 2024.

“Starting next year, we will be able to subsidize part of the interest rates on loans issued to banks,” said Artak Kamalyan, Minister for Industry and Agro-Industrial Complex of the EEC. According to him, the program budget will amount to about $20 million a year over five years, which will finance projects worth up to $1 billion. and will also stimulate integration processes. For Russia, the creation of joint projects is an opportunity to replace supplies that have fallen due to sanctions and the departure of foreign companies, reduce the costs of independent import substitution and reduce risks through cooperation with partners in the EAEU.

Now, at the EEC site, a regulation is being developed on the procedure for selecting cooperation projects and providing financial assistance in their implementation – the efficiency of the mechanism for supporting industrial cooperation will depend on how the regulation is drawn up. Sergey Mikhnevich, Managing Director of the RSPP, Executive Secretary of the EAEU Business Council, says: “It is important that when finalizing the regulation itself, the wishes of the business regarding the peer review of submitted projects are taken into account, and fair and equal access to the tool is provided for all interested parties.” A possible format for peer review and feedback on projects submitted to the RSPP is considered to be the permanent Advisory Council for Interaction between the EEC and the EAEU Business Council (it includes all four major business associations of the Russian Federation). It should be noted that the requirement that companies from at least three EAEU countries participate in projects may cause difficulties. “Many companies have projects with partners from individual member states of the EAEU, but the situation is not easy with the “triple alliances” of business,” the RSPP reports, offering assistance from the EAEU Business Council in solving this problem.

Diana Galieva