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Western Balkans Fund

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Thomas Wieser (right) chairs the Western Balkans Fund meeting at the EBRD

The EBRD’s multi-donor Western Balkans Fund  (0.5Mb) was established a year ago to bring additional investment to the region and to support economic growth and stability .

The Fund represents a coordinated response of 15 donor governments to the needs of five countries - Albania, Bosnia and Herzegovina, FYR Macedonia, Montenegro and Serbia (including Kosovo). Contributors to the EBRD's multi-donor Western Balkans Fund met at the EBRD to mark the Fund’s first anniversary and see Austria hand over the chair to Finland. Thomas Wieser, Director General at the Austrian Federal Ministry of Finance, speaks about the first year of the Fund.

What have been the contributing factors to the success of the Western Balkans Fund?
The Bank as a whole has been incredibly successful and, despite the misgivings highlighted in a recent opinion piece in the Financial Times, it will continue to be successful for a long time. Transition is not over in the region. In the early 90s, the EBRD played a huge role in assisting the central European countries close to Austria. It has since moved further east and southeast and this includes bringing assistance to the Western Balkans economies.

The situation in the Western Balkans is very different compared with the situation 15 years ago in the Czech Republic and the Slovak Republic and later in Romania and Bulgaria. It's also different from the situation in Ukraine and Russia. The painful disintegration of the former Yugoslavia led to the collapse of society and of the economy. We should also remember that there was already some form of market economy in the former Yugoslavia. In a peculiar way, this may have made the situation more difficult to rectify after its collapse than if it had been a Soviet-style, centrally-planned economy. These two aspects have certainly made transition more challenging and the interaction of economics and politics is also probably more complicated in the Western Balkans.

Projects approved by the Western Balkans Fund offer a clear illustration of what we can achieve together. For example, projects in the water sector are crucial because no private investors have stepped in to rectify the severe health hazards associated with inadequate communal water systems in cities and regions.

But it is not just money that matters. More importantly, these countries lack know-how. Bringing finance and expertise to the region shows that the work of the EBRD combines that of a development bank with that of a commercial bank. This is one of the reasons why Austria is very happy to put taxpayers’ money into instruments like the Western Balkans Fund. After looking at what a lot of institutions and countries do, we believe that the EBRD does it better and that is why we are in the Fund.

Do multilateral donor funds work better than bilateral instruments?
This fund does a better job than we would do on our own. It also provides the answer to donor coordination and gives a coordinated response to the region’s needs.

What specific areas do you see as major priorities for the Fund?
Infrastructure is another sector that craves investment in the region. It is a precondition for increasing growth at national level and fostering regional cooperation and trade.

If the Bank and other multilateral organisations can be catalysts for improving infrastructure and making these economies trade with each other and grow together as Austria has done with all of its neighbours, then we will have helped more than we would have had done through bilateral agreements.

How well does the Western Balkans Fund mirror Austrian interests in the region?
Some of the countries of the Western Balkans are still far from acquiring EU membership and the unresolved ethnic issues make the situation more complicated. In this context, anything that increases political stability in the region is of benefit to Austria and anything that increases growth in the region is of interest to Austria and the EU.

Growth provides jobs, gives hope to the best and brightest in the Western Balkans and stops the huge brain-drain that these countries have experienced. Most of the qualified workers from the Western Balkans can be found in places like Zurich, London and Düsseldorf, but sadly not back home. If improvements in their home countries encourage them to return with their know-how, savings and connections, then we will have made the region a better place.

By Marjola Xhunga, Communications Adviser
Photos: EBRD
Contact: Official Co-financing Unit

19 December 2007