International lenders boost Eurasia private-sector financing by 50%

International financial institutions increased non-sovereign financing across Eurasia by 50% to $6.8bn in the first nine months of 2026, with Kazakhstan accounting for most of the growth as new lenders entered the market and guarantees became a more prominent funding instrument, the Eurasian Development Bank (EDB) said in a new report.

Financing to private-sector borrowers and projects without a sovereign guarantee reached $6.79bn in January-September, compared with $4.53bn a year earlier, according to the EDB’s analytical brief, New Players and Major Projects: IFI Investment in Eurasia in Q3 2026.

Kazakhstan received $4.1bn, or about 60% of the regional total, against $1.86bn in the same period of 2025. Excluding Kazakhstan, financing across the other seven recipient countries remained broadly unchanged at around $2.7bn, highlighting the concentration of international development funding in a small number of large transactions.

The increase came despite a weaker third quarter, when financing fell 36% year on year to $1.07bn, from $1.67bn, and declined 74% from the second quarter’s $4.04bn.

The EDB attributed the quarterly contraction mainly to a reduction in large transactions. Deals worth at least $100mn fell to $190mn from $981mn in the previous quarter, while smaller operations increased 29% to $882mn.

The report covers Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan.

Its authors, Anton Malakhov and Madi Aldanazarov, expect activity to recover in the final quarter, with operations from the EDB, the European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB) likely to provide the main impetus.

Guarantees gain ground as financing tool

A significant change in the composition of financing was the growing use of guarantees, which accounted for 21.9% of non-sovereign IFI financing in January-September, compared with 4.1% a year earlier.

The value of guarantees increased to approximately $1.5bn from $200mn, allowing multilateral institutions to support commercial lending while limiting the amount of their own capital committed directly to projects.

The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), the EDB and the EBRD were the principal providers.

MIGA accounted for much of the increase, issuing a $998mn guarantee in the second quarter linked to financing for the Development Bank of Kazakhstan, followed by a further $190mn guarantee in the third quarter covering a loan from Germany’s KfW for renewable energy projects.

The agency also backed a $785mn road loan to the same bank, in a further example of its role in mobilising financing for Kazakhstan’s infrastructure.

The EBRD provided a portfolio guarantee of up to €75mn ($86mn) for Azerbaijan’s AccessBank, covering up to half of the credit risk on loans to small businesses.

The growing use of guarantees reflects a broader effort by multilateral lenders to draw commercial banks and private investors into projects in emerging markets, where perceived risks can limit access to financing.

Kazakhstan attracts new lenders

Kazakhstan remained the principal destination for IFI financing, with third-quarter non-sovereign operations rising 76% year on year to $479mn, an increase of $207mn.

The country has also become a testing ground for new international financing mechanisms.

The OPEC Fund for International Development approved its first non-sovereign operation in Kazakhstan, a $30mn loan intended to support lending to small businesses and agribusinesses.

The fund’s regional financing increased to $90mn in the third quarter from $10mn a year earlier. It also provided $40mn for an Azerbaijani desalination project.

The Turkic Investment Fund, established in 2023 with $600mn in capital and owned by Azerbaijan, Hungary, Kazakhstan, the Kyrgyz Republic, Turkey and Uzbekistan, approved its first operations.

These included financing of up to $10mn for Kazakhstan’s KMF Bank, alongside up to $50mn from the EBRD, and up to $20mn for the modernisation of Almaty Airport under a syndicated package arranged by Bank of America with EDB participation.

Azerbaijan’s financing more than quadrupled to $185mn in the third quarter, while Mongolia’s increased 36% to $180mn.

Source: Intellinews