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Board of Governors supports EBRD initiative for poorest countries |
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The EBRD’s increasing emphasis on the seven poorest countries in its region of operations earned strong support today from UK Prime Minister Tony Blair, Luxembourg Prime Minister Jean-Claude Juncker, Chairman of the EBRD Board of Governors. In his opening speech to the Governors at the EBRD Annual Meeting this morning, EBRD President Jean Lemierre announced the Bank will put greater emphasis on lending to Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan. In these countries of the Commonwealth of Independent States (the ex-USSR), more than half the population lives below the poverty line. The immaturity of market economies and the fragile state of democracy in these 'Early Transition Countries' (ETCs) have discouraged foreign investment. To increase its investments in these countries the EBRD will accept greater risks in projects it finances and increase staff dedicated to the ETCs. The Bank has asked donor governments to increase grant funding to pay experts to help local companies get into shape to qualify for financing, and to advise governments on reform that will improve investment climates. Blair: unique blend of expertise Mr Blair told the annual meeting of the Bank’s Board of Governors the EBRD “can bring its unique mix of private sector expertise, institutional experience and finance to bear (in these countries). But it needs the commitment of the countries themselves, new interest from domestic and international investors, effective coordination with the international community and grant support”. “These countries are at an early stage of transition” to market economies and democracies, said Mr Blair, adding they require “substantial help to reduce poverty, to promote growth and tackle corruption, organised crime and HIV/AIDS. “The UK is ready to engage with the Bank in shaping this initiative and in giving new financial support. Within the Bank this agenda needs to be promoted as a core priority. The Bank must continue to search for ways to engage constructively in countries where problems exist over political reform. This is not about imposing a particular form of democracy from outside. Rather it reflects the beliefs of the Bank’s founders, confirmed in practice, that political reform and economic progress are inextricably linked.” Juncker: risk-taking part of mandate Jean-Claude Juncker, who is simultaneously Luxembourg’s Prime Minister and Minister of Finance as well as the country’s EBRD Governor, also voiced his support for the Bank’s Early Transition Countries (ETC) initiative. He acknowledged EBRD’s decision to accept higher risk in its loans to businesses in those countries, saying “risk taking within the parameters of sound banking fully corresponds to EBRD’s mandate.” The fact the Bank has been very profitable in recent years “provides a cushion for enhanced risk-taking,” he said. Mr Juncker made reference to Article 1 of the founding agreement for the EBRD, which states the Bank will work in countries “committed to and applying the principles of multiparty democracy, pluralism and market economics”. “By moving further east and south, not only will the economic environment become more difficult, but the conditions listed in Article 1…namely political diversity and democratisation, are likely to gain greater prominence.” Mr Juncker agreed with the Bank’s ETC policy of both adapting its existing financing instruments, and developing new ones for the ETCs, as well as building a new banking team from existing staff, to bring more and better projects forward for financing. Mr Juncker said donor countries have an increased responsibility for the success of the Bank’s ETC initiative. That’s because grant financing is needed to put potential investments into shape where they qualify for EBRD loans and equity participation. He announced that Luxembourg is already prepared to boost its support for the EBRD’s advisory services to local businesses and its small and medium-enterprise banking programmes.
19 April 2004 |
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