Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling US$7.85mn with OJSC Rostelecom.  The loan is cofinanced with Sumitomo Mitsui Banking Corporation (SMBC).



The loan will financially support Japanese exports by providing a direct loan (buyer’s credit) to Rostelecom in Moscow, Russia, to import an optical transmission device and other communications equipment (manufactured by NEC) from Sumitomo Corporation in Japan.


The optical transmission device and other equipment are imported to improve the communications environment between various regions, including between Moscow and St Petersburg.


Marking a shift from the past policy to obtain guarantees by the Russian government, JBIC assumed the credit risk of the Russian corporation directly in financing the loan for Rostelecom, a joint stock company providing long-distance and international telecommunication services in Russia, for the first time in March 2004.


The newly signed loan is the JBIC’s second corporate risk-taking loan.  JBIC intends to take corporate risks in financing Russian corporations to support the exports of Japanese firms to Russia, while closely watching the credit standing of Russian corporations.


The Russian economy turned around in 1999, after the financial crisis of August 1998, and has been receiving spotlight as the essential component of BRICs in recent years.  In Japanese Manufacturers’ Overseas Business Operations 2004, an annual survey conducted by JBIC, Japanese manufacturing companies indicated growing interest in Russia as a destination for expanding their business activities over the medium-term (next three years). Russia ranked sixth, compared to 10th in FY2003 and 16th in FY2002.  Compared with American and European firms, however, Japanese firms trail in expanding their business activities with Russia. Thus, JBIC loans are expected to support Japanese trade and investment activities aimed at Russia, thereby contributing to closer economic ties between Japan and Russia in the coming years.