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EBRD approves Yugoslav membership
The European Bank for Reconstruction and Development (EBRD) today announced that its Board of Governors has voted overwhelmingly to admit the Federal Republic of Yugoslavia to membership in the Bank. The EBRD is the first international financial institution to approve membership of the country, after the elections of October.
Membership is expected to be effective in January, making Yugoslavia the 27th country to benefit from the Bank’s investment. The EBRD was set up to promote the transition of the former communist countries of eastern Europe to market-based economies. Yugoslavia is expected to be represented by the Swiss constituency at the Bank’s London head quarters.
"The political will of the EBRD’s shareholders has been expressed unanimously in favour of membership," said Jean Lemierre, the EBRD’s President. "A decade after most of the region embarked on the process of transition, Yugoslavia can at last take its place in a new Europe. The involvement of Yugoslavia will go a long way towards helping to unite this important region."
Olivier Descamps, EBRD Business Group Director for South-eastern Europe, is in Belgrade today meeting with Federal President Vojislav Kostunica and Deputy Prime Minister Miroljub Labus to discuss the role the EBRD can play in Yugoslavia. Mr Descamps said during his visit that the EBRD expects to set up an office in Belgrade in early spring. Meanwhile, he said, the Bank will continue to send missions to Serbia and Montenegro to identify and prepare possible projects for the EBRD to support.
"The EBRD will assume an important role in Yugoslavia through its project-oriented and commercially disciplined approach, which has proved effective in other transition economies," Mr Descamps said. "Foreign investment will play a crucial role in the economic transition of Yugoslavia. It brings in scarce investment resources, skills, technology and technical assistance."
It is too early to pinpoint specific potential investments by the EBRD. The Bank is still assessing the needs and opportunities in different sectors in coordination with other IFIs and bilateral agencies. A strategy will be agreed with the government early next year.
The Bank expects to support Yugoslavia in at least five ways:
- Identify and support local creditworthy banks with an emphasis on strengthening their institutional capabilities and providing funding to small, medium and micro-sized enterprises.
- Fund export-oriented medium-sized and large companies undergoing privatisation.
- Make infrastructure investments in the public sector, with an early emphasis on airport navigation and refurbishment, and power and railway rehabilitation.
- Make loans to local municipalities for water supply, district heating or environmental services.
- Mobilise bilateral technical assistance funding to support enterprise and financial sector reforms, which are prerequisite for increased foreign investments and efficient local financial intermediation.
"We offer a long-term financial partnership with Yugoslavia, to address the need for institution building, and to promote and develop sound and viable investments in the country," Mr Lemierre said. "That will require work from both sides. A lot will depend on the depth and pace of the new government’s reform programme, to be articulated in early 2001."
The EBRD is the single largest institutional investor in south-eastern Europe, with total commitments over €3 billion. In the republics of former Yugoslavia, including Bosnia and Herzegovina, FYR Macedonia, Croatia and Slovenia, the Bank has committed over €1.2 billion in direct financing spread among 85 projects. Infrastructure accounts for 45 per cent of this figure, with 30 per cent in the industrial sector and 25 per cent in the financial sector.
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