European Bank for Reconstruction and Development (EBRD):
focus on eastern and south-eastern Europe
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly debate on
26 June 2007 (22nd Sitting) (see Doc. 11300, report of the Committee
on Economic Affairs and Development, rapporteur: Mr Gasòliba i Böhm).
Text adopted by the Assembly on 26 June 2007 (22nd Sitting).
- Thesaurus
1. The Parliamentary Assembly appreciates
the ongoing dialogue with the European Bank for Reconstruction and
Development (EBRD) under the 1992 Agreement of Co-operation between
the Council of Europe and the EBRD as a valuable means of analysing
the economic, political and social aspects of the Bank’s work and
presenting parliamentary views on the challenges for the its action
in its 29 countries of operation ranging from central Europe to
central Asia. The Assembly recalls that the Council of Europe member and
observer states are among the core donor or recipient countries,
whereas five countries of central Asia, where the EBRD is increasingly
involved, as well as Belarus, are among the Council of Europe’s
close neighbours.
2. The Assembly has examined the EBRD’s performance over the
last few years and views the Bank as a very successful financial
institution faithful to its mission as a development bank with a
political dimension. Its strong commitment to promoting market-oriented
economies, good corporate governance and entrepreneurial spirit
in central and eastern Europe has earned the EBRD a firm reputation
as the leading institutional investor with unique expertise of the
region. Although the Bank is now gradually disengaging from central
Europe, its steady policy dialogue with partner governments and
market operators continues to play the role of catalyst for continued
reforms throughout all countries of operations.
3. Following the decisions taken at its 2006 Annual Meeting,
the EBRD will gradually shift the bulk of its operations to regions
to the east and south-east of the European Union, thus leaving the
Union’s new member states by 2010 (except for Bulgaria and Romania)
and concentrating on countries with a more complex political profile,
riskier business environment and rapidly expanding economies. Despite
impressive growth in the region, averaging 6.9% in 2006, the gap
between the so-called “early transition countries” and more mature economies
is growing as a result of a slowdown in reforms across most of the
former group of countries. This represents a structural challenge
for the EBRD’s work and calls for more detailed short-term planning, enhanced
field presence and local reach, more diversified financing offers,
closer co-operation with other international financial institutions,
project associates and local partners, as well as increased vigilance regarding
the integrity of clients.
4. The Russian Federation is and will remain the largest beneficiary
of EBRD’s funding. Its share in the Bank’s annual business volume
was 38% in 2006 and is projected to grow further, approaching half
of all EBRD new lending in 2007. This strengthening participation
is a sign of improving investor confidence in the Russian economy
and will hopefully pave the way for increased foreign investment
across all regions and economic sectors. The Assembly recalls its
Resolution 1523 (2006) on Europe’s interest in the continued economic development
of the Russian Federation and reiterates its support for the action
plan set out therein. The Assembly trusts that the EBRD will assist
the Russian Federation in overcoming its excessive dependence on natural
resources, improving corporate governance, modernising infrastructure,
promoting financial intermediation, especially in favour of SMEs
and regional development, and better exploiting scientific and technological
potential.
5. The South Caucasus region (Armenia, Azerbaijan and Georgia)
has enjoyed sustained growth in recent years and made steady progress
towards completing the first phase of economic reform, despite persisting political
tensions, but lags behind other EBRD client countries in terms of
overall development. Weaknesses in democratic institutions and the
rule of law, corruption allegations, corporate governance problems
and deficiencies in infrastructure, competition policy and financial
markets are cause for concern throughout the region. The Assembly
strongly encourages the EBRD to intensify further its work in these
countries and facilitate regional co-operation, notably under the
Early Transition Countries Initiative, thereby contributing to political
and macroeconomic stabilisation of the region.
6. The Assembly welcomes the involvement of the Council of Europe
and the EBRD, together with other international organisations, in
the Kyiv Initiative Regional Programme designed to promote a democratic
and participative society by contributing to sustainable cultural,
social and economic development in Armenia, Azerbaijan, Georgia,
Moldova and Ukraine. The Assembly believes that more such co-operation
initiatives will be identified in the future, not least in the light
of the recent signature by the EBRD of a memorandum of understanding
with the European Investment Bank (EIB) and the European Commission
with a view to facilitating joint projects in eastern Europe, the
Southern Caucasus, the Russian Federation and central Asia, under
the European Union’s European Neighbourhood Policy and other bilateral
partnership programmes.
7. The Stability Pact for South Eastern Europe has stimulated
the revival and dynamism of the region’s economies. It has nurtured
stability, regional co-operation and common approaches to many challenges, including
organised crime and corruption, as well as assisting in the creation
and consolidation of a regional electricity market and free trade
area. As the Stability Pact is undergoing transformation into a
regional co-operation council that should foster the implementation
of regional projects, the EBRD should remain a major actor in the
change and in boosting private entrepreneurship, not least through
its Western Balkans Initiative launched in May 2006, as well as
the TurnAround Management and Business Advisory Services Programmes (TAM/BAS).
8. EBRD studies and expert estimates show that one third of GDP
in most transition countries is generated by the informal economy.
This anomaly signals imbalances in taxation systems, social security
contribution levels, overly complex regulatory frameworks and a
lack of employment opportunities in the formal sector, especially
in rural areas. The EBRD should pay special attention to screening
the integrity of its clients and partners, strengthen project monitoring
and use its authority among policy makers in order to seek the rebalancing
of business regulation, taxes, minimum wages, social benefit levels
and incentives for the creation of highly-skilled jobs with a view
to diminishing informal activities.
9. Healthy financial systems are essential for feeding growth
and development in the transition countries. Their extraordinary
transformation, driven by wide institutional improvements, privatisations
and competition from foreign entrants on the market, has mobilised
substantial domestic and foreign resources towards enterprise creation,
strengthening private ownership and structural reforms. However,
many smaller firms, especially in the Commonwealth of Independent
States (CIS) countries, still do not have access to the formal financial
system; the proportion of non-performing loans, peaking at 15% in
the CIS, remains to be lowered to the average level of mature economies;
and the range of financial services and products needs to be broadened.
The EBRD should seize large untapped opportunities in this domain
while contributing to continued improvements in the regulatory framework
and business environment, promoting corporate responsibility and minimising
entrepreneurs’ reliance on informal financing.
10. One of the most pertinent development challenges in central
and eastern Europe is the need to enhance the efficiency of energy
use in order to ensure greater competitiveness of local enterprises,
reduce greenhouse gas emissions as economies expand and improve
energy security. The EBRD’s special role in promoting energy efficiency
in the region has been widely recognised by other international
financial institutions. The Assembly, in this context, underlines
the importance of the EBRD’s 2006 Sustainable Energy Initiative, designed
to more than double the Bank’s investments in energy efficiency
and cleaner technologies over the next three years. Accordingly,
the Bank will invest about €1.5 billion over the 2006-2008 period
while supplementary donor support could reach around €100 million.
This is in addition to multiple industrial energy efficiency projects,
energy efficiency credit lines and support for renewable energy
facilities, district heating projects and urban transport system
modernisation programmes that the Bank has financed since 2001,
as well as the management of the international community’s nuclear
safety funds for central and eastern Europe.
11. The Assembly, in conclusion, calls on the EBRD to:
11.1 keep strengthening its field
presence in client countries by setting-up new offices or reinforcing staff,
as may be appropriate, especially in the regions of the Russian
Federation and in other CIS countries;
11.2 diversify and customise its financing offers so as to
include more loans in the local currency of its client countries
and more microcredit facilities;
11.3 continue its support for the financial sector of its client
countries with a view to promoting high corporate responsibility
and enhancing credit availability through the official institutions
to both enterprises and households;
11.4 promote cross-border investment projects in the Southern
Caucasus;
11.5 seek closer co-operation in the co-financing of projects
with other international financial institutions, especially the
World Bank, the International Finance Corporation, the European
Investment Bank and the Asian Development Bank, as well as project
associates such as the Investment Centre of the Food and Agriculture
Organisation of the United Nations and the Central European Initiative;
11.6 facilitate the transfer of know-how to the early and intermediate
transition countries, especially with regard to environmental risk
management, energy efficiency and quality tourism services, notably through
its TAM/BAS programmes;
11.7 boost infrastructure investment through enhanced participation
in public-private partnerships and lending to municipalities.
