IFC and Finland to Continue Cooperation in Russia

June 6, 2003, Washington, DC. The Ambassador of Finland to the United States, Mr. Jukka Valtasaari, and the Executive Vice President of the International Finance Corporation, Mr. Peter Woicke, today signed an extension of the cooperation agreement between the Government of Finland and IFC for Eastern Europe. This extension builds on the fruitful cooperation between Finland and IFC, the private sector financing arm of the World Bank Group, in Russia over the last two years. Within the framework of this cooperation, IFC, Government of Finland and private sector currently provide technical assistance to develop the private sector in Russia focusing on 1) forest sector development, 2) leasing, and 3) information and communication technologies. The initial cooperation agreement for Russia was signed by the Prime Minister of Finland, and the President of the World Bank Group in Helsinki in March 2001. Under this agreement IFC has implemented the above mentioned three technical assistance programs in Northwest Russia with the following objectives: 1) to introduce sustainable forestry management practices, improve wood harvesting and transporting capabilities, foster the improvement of the enabling environment to encourage investments in modern sawmills and facilitate business partnerships between Russian and Finnish private firms in the forestry industry 2) to develop the local leasing industry, provide training and advice to Russian lessees and develop mutually beneficial links between Finnish and Russian companies through leasing 3) to develop the local Information and Communications technology industry in Northwest Russia and to assist Finnish companies to develop relationships with Russian firms in the Information and Communications technology sector "It is vital to implement our cooperation with Russia as a part of the wider European and international framework in a very close collaboration with international financing institutions and organisations such as IFC in the World Bank Group. There is a clear understanding of the increasing role of the private sector in international cooperation. The Finnish government wholeheartedly supports IFC’s technical assistance programs in the former Soviet Union”, commented Ambassador Valtasaari. “At the same time, we in Finland have learned to highly respect the experience and knowledge the Russians colleagues bring to this cooperation. It is important that the programs implemented in Russia draw on the know-how present in Russia and that they are carried out together with Russian professionals." “In its ten years of work in Russia, IFC has witnessed first-hand that integrating its investments with advisory work not only ensures financial sustainability of our projects, but also that Russian economy and communities derive much greater benefits from them. That is why IFC is paying increasing attention to technical assistance work around the globe. We are grateful for Finland’s past and renewed support of our development efforts in Russia and look forward to our continued cooperation,” commented Mr. Peter Woicke, the Executive Vice President of IFC. Together with the other EU-countries, Finland has actively participated in efforts to support the political and economic transition process in Central and Eastern Europe since early 1990's. Finland’s assistance programs are regarded as a national contribution to the European Union Northern Dimension Policy. In implementing the cooperation, half of the grant allocations is channeled through the International Financing Institutions (IFIs). According to the independent evaluations, cooperation with the IFIs has proven to be beneficial to all parties. Based on this positive experience, Finland would like to continue and improve this cooperation. Cooperation with IFC has been carried out with the Ministry for Foreign Affairs and Ministry of Trade and Industry of Finland. Neighboring area cooperation between Finland and Russia aims at increasing mutually beneficial cooperation. It supports the process of political and economic change in Russia and promotes Russia's participation in European interaction. In 1992-2003 over 1000 projects have been realized. The mission of IFC is to promote sustainable private sector investment in transition economies, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the emerging markets, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications. Russia joined IFC in 1993. Since then IFC has invested over $770 million to finance 68 projects across a variety of sectors. IFC significantly increased its investment program in Russia in the last fiscal year (July 1, 2001 – June 30, 2002), investing $315 million in 20 projects worth $741 million. IFC’s increased activity reflects the improving investment climate in Russia, greater opportunities in an increasingly broad range of sectors, and stronger foreign investor interest.