EBRD to up capital investment in Eastern Europe in 2009
Azerbaijan, Baku, Feb. 26 / Trend , N.Ismayilova/
The European Bank for Reconstruction and Development (EBRD) plans a substantial increase in investments in 2009 as a direct response to the impact of the global financial crisis on the economies of eastern Europe, after making a net loss in 2008 of €602 million, the bank said.
The 2008 shortfall, which compares with a net profit of €1.9 billion in 2007, was largely a result of unrealized losses in the EBRD's holding of equity stakes which have fallen in value in line with the decline of stock markets worldwide.
"The loss will not affect the Bank's investment plans as the EBRD remains very strongly capitalised. The Bank is planning to invest around €7 billion across its countries of operations this year, compared with €5.1 billion in 2008," the bank said.
The EBRD's response to the crisis, which is now impacting all the countries where it invests, has focused on the immediate needs of the financial sector, in order to help strengthen sound institutions and maintain flows of credit to small and medium-sized enterprises (SME), whose sources of funding have dried up.
Recent investments have included financing packages for Bank of Georgia, for Ukraine's Raiffeisen Bank Aval and for Banca Transilvania, one of Romania's leading SME banks.
The EBRD has also provided financial support to three regional banks in Russia with the aim of strengthening their capital base and to help make sure they can continue to support the economy, particularly small and medium-sized enterprises.
In seeking solutions to the Eastern Europe's problems, the EBRD is working closely and successfully together with other international financial institutions and organisations.
"The region's problems are deeply interwoven with those of the rest of Europe and the solution lies in a co-ordinated response from public authorities and international financial institutions," said EBRD President Thomas Mirow.
The EBRD's investments of €5.1 billion in 2008 compared with €5.6 billion in 2007, with the decline mainly due to the impact of the financial crisis on the timing of project signings in the fourth quarter of 2008.
During 2008, the Bank continued to place a high priority on investments in the Western Balkans, as well as in Azerbaijan, Armenia, Georgia, Kyrgyzstan, Moldova, Mongolia, Tajikistan and Uzbekistan. A strong emphasis on investments in sustainable energy projects also continued.
Investments in the Early Transition Countries rose 14 percent to €586 million, while business volume in the Western Balkans rose 16 percent to €534 million. Investments in sustainable energy projects reached close to €1 billion, or 20 percent of total volume.
Since its creation in 1991, the EBRD has invested a total €41.7 billion. Together with third parties and via co-financing, the Bank has invested €134.8 billion over the last 17 years.
Despite the impact of the financial crisis, the Bank has maintained its strong capital position, with members' equity and callable capital totalling €26.3 billion at the end of 2008, against banking loan and equity assets of €15.1 billion.
The EBRD also continues to maintain high levels of liquidity and has effective access to international capital markets where it benefits from its Triple A status.
The EBRD invested $114 million in 19 projects of the Azerbaijani economy in 2008.
Do you have any feedback? Contact our journalist at [email protected]