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EBRD unveils Russia strategy for 2003-04
Making the growth process sustainable is key challenge for the future
The European Bank for Reconstruction and Development will over the next two years concentrate its efforts in Russia on reaching further out into the regions, assisting the modernisation of infrastructure, helping the country diversify its revenue base and promoting its integration into the international economy.
The 2003-2004 strategy for Russia - approved by the EBRD's Board of Directors and published today on the EBRD's website www.ebrd.com - affirms the Bank's increased commitment to Russia and says the country will account for a growing share of its business going forward. Russia is already the EBRD's single largest target for investments with €4.5 billion committed since 1991.
The strategy cautions that Russia requires further progress in policies and reforms to realise its true economic potential, despite considerable achievements in terms of financial stabilisation and general macroeconomic performance. It says consistent implementation of structural and institutional reforms is needed to counterbalance the continued appreciation of the rouble and sharp wage increases.
The strategy also points out that the Russian economy remains highly vulnerable to commodity price swings and argues that diversification to non-energy sectors is essential for sustained growth.
Finally, the strategy indicates that a key to success over the long term will be "deep" democratisation - meaning consistent and sustained implementation of the principles of pluralism and an open society, including media freedom and respect for human rights.
To contribute to diversification, the Bank will focus on promoting the modernisation of manufacturers, helping the banking sector lend more to the real economy, and extending its already robust support to small business. By financing high-quality Russian companies and foreign investors, the Bank will support clients that can set high business, technological, environmental and corporate governance standards for others.
Reform of the banking system is directly linked to the issue of diversification. Greater confidence in and oversight of Russian banks will stimulate more deposits by households and corporations, creating the means for investment in sectors of the economy other than natural resources.
The Bank will step up its programme to renew municipal infrastructure and finance key transport projects. Development of the transport sector is important for Russia's integration into the world economy because it will help reduce the high transport-related costs that businesses face today.
The Bank will support changes in legislation allowing it to access the local long-term debt market and launch a rouble bond. This is needed if the EBRD is to be able to offer clients local-currency loans, an attractive option for clients with no access to export revenues, such as SMEs and municipalities.
The strategy places special emphasis on building a balanced regional investment portfolio. The idea is to build a cluster of Bank operations around a few core segments of the economy - mainly infrastructure and SMEs - that would advance sustainable development, economic diversification and regional integration.
In Kaliningrad, for example, the Bank has developed a plan that calls for significant investment in water treatment facilities, establishment of a branch of a specialised SME-lending Bank, and the launch of a study to assess the difficulties faced by small business.
Also in Russian.
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