Feature story

Western Balkans Initiative launched

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Irena Sodin, EBRD Alternate Director for Slovenia.

Eleven donors agree to provide financial aid to the Western Balkans as part of a new EBRD-led initiative for those south-eastern European countries

As part of the EBRD’s commitment to re-allocate resources from relatively developed economies of central Europe to less developed countries to the south and east, the Bank launched its Western Balkans Initiative today at a donor conference just ahead of EBRD’s Annual Meeting in London.

Eleven countries committed €10 million in donor funds towards this initiative to boost private business investment and infrastructure development in Albania, Bosnia and Herzegovina, FYR Macedonia, and Serbia and Montenegro, including Kosovo.

Donor countries supporting the initiative thus far are Austria, Canada, Finland, Ireland, Luxembourg, Netherlands, Norway, Slovenia, Spain, Sweden, and the United Kingdom.

Slovenia’s decision to join the initiative is a sign of its more advanced economic development relative to much of the EBRD region. The country joined the European Union in 2004 and its economy has grown to the extent that it is likely to soon ‘graduate’ from the EBRD. Thus it is well-positioned to provide donor funds to poorer neighbouring countries through the new Western Balkans Fund.

“Investing in the western Balkans is very important for Slovenia,” said Irena Sodin, Alternate Director for Slovenia on the EBRD Board of Directors. “When Slovenia gets the EU presidency, it wants to demonstrate that it is ready to invest in the stability of the western Balkans knowing that it will have an impact on people in the region.”

“It is very, very moving to see a country of operations become a donor,” commented EBRD President Jean Lemierre, “to see the links developing between neighbouring countries and to see a country like Slovenia, which has received a lot, begin to give to others.”

Emphasis on creating more jobs

The EBRD has a pipeline of around €800 million of new investments under consideration over the next two years for the western Balkans. The Western Balkans Multi-Donor Fund will help to increase the EBRD’s reach in this region.

In the past 15 years, the western Balkan countries have seen it all, from the fall of communism to civil wars and reconstruction. After years of international political and financial efforts to turn these countries around, the focus is now on helping them to prepare for possible membership in the European Union.

The EBRD has invested continuously in this region to strengthen the banking system and prepare it for the market economy. It now will put greater emphasis on creating more jobs in the local private sector and helping companies to become bankable.

Leander Treppel, Representative of the Federal Ministry of Finance of Austria, said the new initiative for the western Balkans will benefit the people of the region and receives full support from Austria under its Presidency of the European Union.

Thanking the donor community for their generosity, Mr Lemierre pointed out that key priorities in this region are growth in private sector investment and employment, and improved access to basic services such as clean water, reliable energy and transport.

Focused and integrated effort to develop the private sector

The Western Balkans Initiative builds on a similar EBRD programme for the Banks’s seven poorest countries of operations in the Caucasus and central Asia, the early transition countries (ETCs). This programme was established in 2004 to support private sector development in these countries.

The special thing about multi-donor funds such as those for the ETCs and western Balkans is that they bring the EBRD and donors together into a focused and integrated effort to develop the private sector. While some donors have bilateral agreements with the EBRD and individual countries, multi-donor funds not only deliver needed resources but also provide an improved way for the EBRD, donors and recipients to work together.

Gerrit Zalm, Minister of Finance for the Netherlands and Chairman of the EBRD Board of Governors, said the benefits of combining donor financing with EBRD projects have been witnessed across the Bank’s countries of operations, and play an important role in promoting development and reducing poverty. This is why The Netherlands was amongst the very first countries to commit grant resources to the western Balkans fund, he added.

By becoming part of the Western Balkans Fund, each donor will be able to invest in more projects in the western Balkans than they could on their own.

This fund will enable the EBRD to use donor funds to identify and prepare key projects that are vital to economic growth and regional co-operation. The fund will aim at narrowing the gap in economic development that has emerged between the Western Balkans and neighbouring countries.

Written by Marjola Xhunga, EBRD Communications Adviser

21 May 2006