OREANDA-NEWS. July 21, 2011. As part of holding Russian-German interstate summit consultations in the city of Hannover in the presence of Russian President Dmitry Medvedev and Federal Chancellor Angela Merkel, State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ and Germany’s State Bank KfW entered into a Memorandum of Understanding.

On behalf of Vnesheconombank the Memorandum was signed by Vnesheconombank Chairman Vladimir Dmitriev and on behalf KfW – by its Board Chairman Ulrich Schroder.

Under the Memorandum the parties are exploring the possibility to set up a Fund to Support Entrepreneurial Activities in order to expand the range of instruments for funding small and medium-sized enterprises in Russia by way of raising long-term foreign investments.

The financial institutions intend to make arrangements for preparing independent feasibility study to form the basis for subsequent measures and procedures including those for preparing a whole package of documents required to set up the aforementioned Fund.

A Fund to be set up would make it possible to raise additional funds to finance small and medium-sized enterprises by using advanced mechanisms for funding innovation projects with due regard to the best foreign business practices in this sector.

For many years under the TRANSFORM Program, KfW has been supporting the economic development of the financial and SME sectors in Russia. As an authorized representative of the Federal Finance Ministry and the Federal Economics and Technologies Ministry, KfW provides support for its partners by way of offering targeted consulting services (in such sectors as law-making, conducting refresher courses for managers and providing support for SMEs and boosting the development of financial system) as well as assisting refinancing programs.

In 2009, Vnesheconombank and KfW joined their efforts by entering into an agreement on a scheme to refinance Russian banks that provide support for SMEs in the amount of 200 million euros and by approving a scheme for refinancing  modernization and innovation activities undertaken by SMEs in the amount of 100 million euros.