2010 business plan and budget

Executive summary

The Bank’s Business Plan and budget for 2010 reflects the final year of the implementation of the Third Capital Resources Review strategy and framework (CRR3), which covers the period 2006 to 2010.

Context

The CRR3 medium term resource framework reflects an increasing portfolio, a more complex operating environment and a sustained focus on efficiency and internal resource reallocation. The implementation of the CRR3 strategic objectives continues at a strong pace. However, as the Bank enters the last year of the CRR3 period, its region of operations has been severely impacted by the crisis.  Driven by strong demand to support financial sector stability, corporate financial restructuring and infrastructure financing requirements, the pipeline of the Bank has increased sharply to provide an enhanced crisis response within the current capital capacity of the Bank. 

In 2010, the Early Transition Countries, the Western Balkans and Sustainable Energy Initiative will continue to be areas for active development in line with the Bank’s strategic objectives.  Additionally, strategic decisions taken in the context of the fourth Capital Resources Review (CRR4) - (2011-2015) may also affect the Business Plan for 2010.  In particular a positive capital enhancement decision would provide the opportunity for a fuller response to transition opportunities and demand. 

Reflecting the complex and challenging operational environment and based on its operating principles of transition impact, sound banking and additionality, and building on its strong crisis activity during 2009, the objectives for 2010 are to: 

• Maintain a high transition impact of 2010 activity to both advance transition where possible and to protect transition gains where necessary.
• Where relevant, maintain crisis response activity including the remaining work under the Joint IFI initiative in the financial sector, continued support to the corporate sector on restructuring and financing of priority infrastructure projects affected by the crisis.
• Build on the strengthened and unprecedented scale of IFI cooperation achieved over the past year at the policy and operational levels. 
• Maintain focus on syndication and cofinancing opportunities within a more challenging and risk-averse market.
• Sustain dynamic implementation of regional strategic initiatives in the Early Transition Countries and the Western Balkans.
• Actively develop operational activity related to the implementation of Phase 2 of the Sustainable Energy Initiative across key sectors and countries.
• Continue to enhance the Bank’s capacity to provide local currency loan products to its clients, as well as providing assistance with the reform of the capital market laws and regulations.
• Given the potential favourable market context, pursue development of equity opportunities.
• Maintain focus onactive portfolio monitoring ensuring early engagement with clients to protect portfolio quality and to mitigate the impact of rising risk.
• Mobilise appropriate donor funding to support technical cooperation activity and investment grants to improve corporate governance, strengthen the regulatory environment and address market failures.
• Ensure an appropriate level and allocation of resources to deliver 2010 objectives with high standards, as well as maintaining focus on staff development and skills.
• Continue the implementation of the Gender Action Plan with specific focus on completing the gender analysis of investment portfolios in three pilot counties – Georgia, KyrgyzRepublic and Romania.  This will aim to identify obstacles and missed opportunities to promote gender equality and women’s empowerment across sectors.

Business Plan Objectives

The objectives within the Business Plan and Budget for 2010 include:

• a net portfolio growth within a range of €3.5 to €4.5 billion
• annual business volume within a range of €7.5 to €8.0 billion, with a high transition impact target
• net operating asset growth within a range of €2.6 to €3.6 billion with underlying disbursements within a range of €5.6 to €6.1 billion supporting the continued build-up of the operating assets base of the Bank

Budget

The 2010 Budget increases by 0.8 per cent in real terms from the 2009 budget, given assumed inflation forecasts.

The 2010 Business Plan and Budget sets out the objectives and the resource framework for the Bank’s activities for the last year of implementation of CRR3 with an emphasis on providing an effective, continuing crisis response capability and preparing for CRR4.

The Bank’s activity levels remain high and therefore the 2010 Business Plan and Budget provides for incremental resources.  The 2010 Budget includes an increase in the overall headcount ceiling by 11 positions.  However, decisions on CRR4 may also have potential implications on the Business Plan and Budget for 2010.

The Bank’s competitiveness and attractiveness as an employer, in job markets in both London and in several countries of operations, continues to require targeted recruitment efforts and compensation to ensure that the Bank can attract the necessary professional skills across functions and departments.

The approved 2010 staff compensation and benefits proposals aim to reward individual performance and reduce the gap with the market within a reasonable overall resource framework. They include:

• a total 1.2 per cent provision for headquarters based staff;
• a total 6.0 per cent provision for resident office based staff; and
• a performance related compensation pool based on 13.5 per cent of the eligible professional staff payroll