EBRD eyes extending mandate in Greece to 2025 to spur growth
The European Bank for Reconstruction and Development will ask its board to approve extending its mandate in Greece by five years to 2025 to help economic recovery in the country, EBRD President Suma Chakrabarti told Reuters on Tuesday.
Active in Greece in the last 2-1/2 years, the development bank has so far financed 1.6 billion euros ($2 billion) of investments through 31 projects, all with the private sector. Athens asked it to extend its mandate, due to end in 2020.
Greece, slowly emerging from a deep financial crisis, is expected to exit its third bailout program in August this year. Battered by the debt crisis, its economy has begun to recover, attaining growth of 1.4 percent last year
“In April we will put forward our recommendation to our board to extend our mandate to 2025,” Chakrabarti said in an interview. “I am pretty confident it will get their support.”
Chakrabarti, who will be seeing Prime Minister Alexis Tsipras later on Tuesday, said the bank would provide 400 to 600 million euros of investment financing in Greece this year.
“Greece is already the fifth largest market for EBRD out of 37, a lot has been done here, but there is a lot more to do,” he said.
He said the bank does not have a capital constraint, with “plenty of headroom” to get involved in more projects including in tourism, property and renewables. But it also wants to diversify into agribusiness and other green energy projects by 2020.
“We would like to get involved in as many projects as the team here can come up with that make sense,” Chakrabarti said.
Set up by governments in 1991 to invest in the ex-communist economies of eastern Europe, the EBRD has expanded its mandate in the last decade and now operates in more than 30 countries.
The EBRD is owned by 69 countries from five continents, as well as by the European Union and the European Investment Bank.
Each shareholder has made a capital contribution and is represented on its board of governors, which has overall authority over the bank, delegating the exercise of most of its powers to the EBRD’s board of directors.
So far the EBRD has laid out funds to recapitalize Greece’s four big banks, provided long-term financing to Fraport to upgrade 14 regional airports and committed money to renewable energy projects.
Procedurally, Chakrabarti said the bank would put forward a recommendation to its board of directors to extend the mandate in Greece, expecting a resolution to be presented later to its board of governors.
“With an extended mandate I want us to spread out, we could do more with small and medium-size businesses across the country. Many SMEs have great ideas but don’t know how to make them bankable,” he said.