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EBRD launches new strategy for Latvia
The European Bank for Reconstruction and Development will do more power, rail and municipal infrastructure deals in Latvia under a new strategy for the country published today on the Bank's website (www.ebrd.com) for the first time. The Bank will in particular seek to do more infrastructure deals that do not require a guarantee from the central government, and to focus on projects that benefit the environment.
The strategy aims to tackle key challenges the country faces in preparing for accession to the European Union. The Bank will also focus on supporting the privatisation of remaining large-scale businesses in the shipping and oil transhipment areas, subject to suitable conditions being met, and other large-scale projects to help attract foreign direct investment. The Bank will give priority to the development of small and medium-sized enterprises (SMEs) throughout Latvia. The EBRD will also, through dialogue with government as well as directly through its transactions, emphasise the importance of good corporate governance in Latvia.
The EBRD is keen to provide selective support to banks to assist in consolidation of the financial sector. The Bank also aims to support the development of non-bank financial institutions, in particular areas such as leasing, mortgage finance, insurance and private pension funds, and provide funding to SMEs via financial intermediaries.
As of November 2001 the EBRD has signed 26 projects worth €302 million in Latvia and helped to mobilise an additional €740 million in investment from sponsors and cofinanciers - for a total project value of over €1 billion. The Bank expects to continue this robust level of investment, and indeed this week signed two further deals in Latvia: an SME credit line with Unibanka and a large investment with the Finnish retailer Kesko.
The strategy notes that Latvia has made substantial progress toward establishing a sound market economy, particularly in terms of price and trade liberalisation, enterprise privatisation and financial sector reforms. At the same time, the EBRD acknowledges the important challenges that still remain. The Bank will continue to work with Latvia to address these challenges, and to support its efforts towards accession to the EU.
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