As Ukraine prepares for the annual IMF/World Bank meetings this weekend, its delegates will be acutely aware that the central topic they will be pressed on in Washington is the future of the reform process in their country. This is because Ukraine continues to send mixed signals, when clarity is needed more than ever.
Only days after the IMF approved the third tranche of its support package for Ukraine on September 14 came a government move to take control of Ukrtransgaz, the company that runs the gas transit infrastructure that takes Russian gas across Ukraine to Europe, away from its parent Naftogaz and place it under the direct control of the economy ministry. Read more
By Chris Humphrey, Overseas Development Institute
As officials prepare to fly to Washington for the IMF and World Bank’s 2016 fall Annual Meetings, the financial capacity of the World Bank and other multilateral development banks (MDBs) will be at the forefront of their thoughts.
The two topics of the October 8 Development Committee meeting — proposed changes to World Bank capital structure and a vision for how the Bank can remain relevant in the next 15 years — both revolve around the Bank’s financial resources.
Governments around the world are grappling with how to meet the July 2015 UN Conference on Financing for Development’s call to move from “billions to trillions” of investing to put our planet on an environmentally and socially sustainable growth path. Read more
As political jostling continues about the future of Europe, it is important to remember that there are six countries in the Western Balkans that have firmly tied their colours to the European mast.
Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia are all actively working towards the ultimate goal of EU membership. All six have a formal contractual arrangement with the EU through Stabilisation and Association Agreements which are all now in force.
The European Bank for Reconstruction and Development (EBRD), an international financial institution that sees cross-border integration as one of its priorities, fully supports this goal. For the countries of the Western Balkans, EU approximation does not just mean reform and investment. It also represents a vision of lasting peace and prosperity – goals that the EU itself has achieved for its member countries. Read more
Members of the board of governors of the European Bank for Reconstruction and Development will choose the bank’s next president on May 11. It has been clear for some time that they will re-elect the current one – Sir Suma Chakrabarti – despite a heavyweight challenger in the form of Marek Belka, the governor of Poland’s central bank. For this reason, this election is generating less excitement than the previous one when five candidates (myself included) squared off in one of the more open races for the helm of a multilateral institution.
Truth be told, Sir Suma and his team have done a good job under demanding circumstances. In addition to the global economic slowdown and related woes with non-performing loans, the EBRD has had to deal with many specific challenges: the start up of its operations in Arab Spring countries, a supposedly temporary expansion of its mandate to Greece and Cyprus, and significant retrenchment from Central and Eastern Europe by western banks. Last but not least, the Ukraine-related decision of a majority of its shareholders to stop new projects in its biggest and most profitable market, Russia, required deft redeployment of financial and human resources. Thankfully, the EBRD has come out of this turbulent period with a rare AAA rating, a comfortable capital cushion and recovering profitability on an expanded portfolio. Read more
Since 1991, the European Bank for Reconstruction and Development has been focused on building a robust private sector and market economy, two key conditions for transition and economic growth. The recent approval of the Bank’s first ever Gender Strategy will provide an enhanced platform to deepen and broaden our commitment to work alongside clients to build sustainable business environments that are conducive to growth. In particular, the EBRD has identified three specific areas of financing where it can most actively respond to the need to diversify, reach new markets and deliver better business, while also actively encouraging gender equality.
Firstly, supporting financial institutions throughout the EBRD region is a pillar of the Bank’s business. This makes it a natural place to launch the Bank’s approach towards promoting gender equality. The business case is clear: currently, there is a global gender credit gap estimated at $285bn and up to 70 per cent of women-led small and medium enterprises (SMEs) are underserved or unserved financially. The EBRD is committed to supporting our partner financial institutions in their efforts to specifically target financing to women entrepreneurs. Read more
A $300m loan to help Ukraine fill its gas storage facilities before winter has today been approved by the EBRD’s board of directors.
The loan will enable Naftogaz, the state-owned oil and gas company, to purchase over 1bn cubic metres of gas (bcm) and so support Ukraine in reaching its target of having 19 bcm of gas in storage. It will also help the country diversify its sources of gas supply by financing purchases from its interconnections with Europe through the so-called reverse flow.
What is more, it is crucial for the wider Europe: a stronger energy security situation in Ukraine, which is still a key transit country, especially for south-eastern Europe, helps to ease a number of European energy security concerns. Read more
By Riccardo Puliti of the European Bank for Reconstruction and Development
With energy security once again a paramount geopolitical concern, the rich energy resources of the Caspian are coming into focus.
In its newly published Energy Union Package, outlining the industry’s biggest shake-up in half a century, the European Union is looking hard at the Caspian region as a diversified source to meet the bloc’s energy requirements. Read more
As anyone who has tried to drive across Almaty at 6pm knows, Kazakhstan’s financial capital is no sleepy city on the steppe.
Car ownership in Almaty city and the surrounding region has soared on the back of Kazakhstan’s growing oil wealth, rising from 617,000 in 2007 to 936,000 in 2011. At rush hour, police regulate the number of vehicles entering the city and traffic on the glitzy Al-Farabi avenue grinds to a halt.
On Tuesday the Kazakh government will attempt to address the gridlock, launching a roadshow in London for tender to build a ring road around the city. Read more
A mixed picture for the prospects of an economic recovery emerging Europe, according to Monday’s forecast from the European Bank of Reconstruction and Development.
The EBRD found that the more advanced countries of central Europe will probably do a bit better than expected next year, while the rest of the post-communist region is sputtering. Read more
Ukrainian President Viktor Yanukovich sounded deadly serious during a passionate speech he gave on his administration’s commitment to fighting corruption on Wednesday.
Himself accused of corrupt practices for the way he managed to occupy a lavish estate in a Kiev suburb, it was delivered at a World Economic Forum event in Kiev, a gathering to discuss the nation’s future as the EU summit nears in later this month in Vilnius. But hang on: wasn’t the EBRD supposed to be in town to sign a new anti-corruption Read more
By Nicholas Watson of bne
Europe may be in the doldrums, but some large infrastructure projects, crucially backed by multilateral lenders and export credit agencies, look set to give Emerging Europe’s economies a fillip over the next couple of years.
“The outlook for infrastructure projects is better, definitely we’ve seen a better start in 2013 and that will continue in 2014,” says Werner Weihs-Raabl, head of infrastructure finance at Erste Bank Group. “Romania and Croatia, for example, are building realistic projects; a few years ago it was rather castles in the sky.” Read more
By Erik Berglof of the EBRD
The latest forecasts show that central Asia and the Caucasus are again the fastest-growing economies in the former Communist countries of eastern Europe and the ex-Soviet Union.
Yet, given the low level of income and relatively high population growth of these countries, the numbers are disappointing. On closer inspection growth is also narrow, mainly stemming from natural resources and remittances from citizens working abroad; countries less endowed with resources are doing worse. Economic reforms are mostly stuck, as are, with a few exceptions, political reform. Read more
Smiles all round on the faces of those officials of the European Bank for Reconstruction and Development who successfully lobbied for their role to be broadened from their traditional stamping grounds in eastern Europe to Turkey, North Africa and beyond.
As any visitor to the organisation’s annual meeting in Istanbul on Friday would have seen, top officials from the likes of Poland, Ukraine and Russia were notable for their absence. But there to fill the gap were the prime ministers of Tunisia, Egypt and Jordan, not to mention the host, Turkey’s premier Recep Tayyip Erdogan. In the ex-Communist bloc, the EBRD is now old hat. In and around the Mediterranean, it still makes news. Read more
Rarely has a forecast been cut so fast. The European Bank for Reconstruction and Development on Friday slashed its 2013 growth forecast for the emerging economies of central and eastern Europe and North Africa from 3.1 per cent in January to just 2.2 per cent.
While the effects of the eurozone crisis have abated, economic activity is slowing faster than expected in the region’s biggest two markets – Russia and Poland. Structural reforms are needed, and needed now, says the bank. But it always says that. Read more
András Simor, the hawkish former governor of Hungary’s central bank who stepped down this month, has quickly found a new perch.
The European Bank for Reconstruction and Development announced on Wednesday that Simor would take a top job as vice president for policy, starting July 1. Based in London, he will be a comfortable distance from Budapest and his arch-critic prime minister Viktor Orbán, whose close ally, György Matolcsy, has been installed in Simor’s office at the central bank. Read more
By Riccardo Puliti of the EBRD
The use of nuclear power generates at least as much debate as electricity.
This is especially true in the case of Ukraine, where in 1986 the Chernobyl accident happened. The events demonstrated that in nuclear power generation safety always must be the utmost priority – from the first moment of operation to long after the active life of any nuclear reactor. Read more
At last, a breath of optimism on central and eastern Europe from one of the more cautious economic forecasters.
The European Bank for Reconstruction and Development on Monday predicted that growth in the region would increase slightly from 2.6 per cent in 2012 to 3.1 per cent this year. More significantly, given the EBRD’s past warnings, the bank is saying that risks of the eurozone triggering another CEE financial crisis are declining. If the bank’s right, that’s good news. Read more
Poland’s banks are generally well financed and solid, but one of their biggest problems is a mismatch between short-term deposits and long-term loans, many of which are denominated in foreign currency – largely Swiss francs. The mismatch has been a concern for regulators, who have pushed banks to make their asset structure less vulnerable to sudden changes in sentiment and to any turmoil in the eurozone.
Now Getin Noble Bank, one of the most aggressive forex lenders during the real estate boom which ended in 2008, has taken a step towards better balancing its assets by securitising a 1bn zlotys ($325m) portfolio of 33,000 car loans last week. Read more
Russia has talked a lot about economic diversification over the past two decades but it has made little progress in weaning itself off revenues from natural resources. A new report by the European Bank for Reconstruction and Development sets out recommendations that might stimulate industrial modernization and tries to make sense of Russia’s abiding addiction to oil. Read more
By Riccardo Puliti of the EBRD
Every autumn, as the cold weather approaches, Europe remembers the gas wars of 2009 when Russian gas – on which some countries are almost entirely dependent – stopped flowing via Ukraine.
But these days gas is good news. Read more