The EBRD has financed the first western investment in the rolling stock manufacturing sector of Belarus.

A loan of €14.5mn, with a tenor of 10 years, has been issued to the Swiss company Stadler Rail, who have entered into a joint venture with the Minsk Region Executive Committee.

The pair will manufacture electrically-powered vehicles in Belarus, sourcing equipment from Belkommunmash, a local producer of trams and trolley-buses.

The head of the EBRD’s Minsk office Francis Delaey describes the project as a “milestone”, and tells GTR that it could be a template for the restructuring of Belarus’ predominantly state-dominated economy.

He explains: “It enables Belarus to modernise its production capacity and introduce up-to-date technology without having to resort to privatisation, which is challenging in such economically uncertain times. On the other hand it enables strategic investors to build on the experience and networks of Belarusian companies and to use Belarus as a basis from which to expand to the rest of the Customs Union and the CIS.”

The EBRD has invested heavily in Belarus and Delaey says it expects to pump another €200mn into 10 to 12 projects in the country this year. “Roughly half of that amount will go the financial sector for on-lending to small and medium-sized companies,” he says.”The remainder will be invested directly by EBRD in medium to large corporate deals mainly in the manufacturing and agribusiness sectors.”

Despite the dominance of the public sector – state-owned companies account for 70% of GDP –Belarus has a number of highly-successful private enterprises, including EPAM, a software solution provider which listed on the New York Stock Exchange last year.

Delaey says the country’s location and member of the Customs Union have both served to boost its status as an exporter. He adds: “To fully realise its export potential Belarus should accelerate WTO accession talks and reposition its industrial base to focus more on high value added products that can compete in a global market.”