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EBRD President visits Yugoslavia
Bank says private investment is crucial for the long-term development of the economy
Investment will be crucial in facilitating the Federal Republic of Yugoslavia’s economic recovery, Jean Lemierre, President of the European Bank for Reconstruction and Development (EBRD), said in Belgrade today. It will be the role of the Bank, he said, to mobilise both domestic and foreign investment by sharing the risk with partners.
"Investment will be an important source of revenue, providing the Government with the crucial means to carry through the economic recovery of the country," said Mr Lemierre. "Investors are not merely bringing new money, but also new skills and strong experience." To encourage investment, however, Yugoslavia must take action to improve its ailing investment climate.
The President of the EBRD, the first international financial institution (IFI) to approve Yugoslav membership, is in Belgrade to meet with Yugoslav President Vojislav Kostunica, Serbian Prime Minister Designate Zoran Djindjic and Miroljub Labus, the Yugoslav Deputy Prime Minister and Governor to the EBRD, as well as other senior officials.
During his visit, Mr Lemierre reaffirmed the Bank’s commitment to promote Yugoslavia’s economic recovery, saying that the country’s membership of the Bank had become effective this week and that the London-based institution hoped to set up a Belgrade office as early as possible. "Yugoslavia is an important member of the Bank and I hope my presence here in Belgrade today is an illustration of that," said Mr Lemierre.
Yugoslavia’s membership of the EBRD was financially facilitated by Switzerland, which accepted the country as a member of its constituency at the Bank. Travelling with Mr Lemierre is Switzerland's representative to the EBRD, Willem Jaggi, who said: "I am pleased that Switzerland can be helpful in bringing Yugoslavia back into the international community and the heart of Europe."
The EBRD will develop a 2001 action plan for Yugoslavia over the next month. Every week, meanwhile, specialist bankers from the EBRD will continue to visit the country and explore ways in which the Bank can best use its resources and prepare concrete projects. "Yugoslavia is at the start of a process of rehabilitation and reconstruction," said Mr Lemierre. "It will take a little time for us to determine exactly how best to proceed. But I hope that the Bank will start several significant projects this year." The EBRD will work in coordination with other IFIs, such as the World Bank and European Investment Bank, and main bilateral donors, such as the European Commission. Mr Lemierre said that each institution had its own specific skills and role to play, adding that an early and appropriate division of labour will ensure a successful implementation of international support.
The Bank’s ability to increase business in Yugoslavia and the pace of the completion of its future operations depend on the Government’s resolution in pushing through privatisation and restructuring and in creating a business-friendly investment climate that will attract foreign and domestic investors. The challenges facing Yugoslavia are great, with the investment climate in a weak state following a long period of neglect and abuse. But these challenges must be overcome if Yugoslavia is to take its rightful place in Europe.
The Bank has outlined to the new Government the five areas in which it is focusing its initial support. It will:
identify and support local creditworthy banks (through debt and equity) with an emphasis on strengthening their institutional capabilities and providing funding to micro, small and medium -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, while encouraging the setting up of a regulatory framework;
mobilise bilateral technical assistance funding to support enterprise and financial sector reforms, which are prerequisite for increased foreign investments and efficient local financial intermediation.
Mr Lemierre described the Bank’s relationship with Yugoslavia as a partnership. He said that a strong partnership is based on open and honest dialogue. Ten years of operations throughout central and eastern Europe, including Slovenia, Croatia, FYR Macedonia, and Bosnia and Herzegovina - four former Yugoslav Republics - gives the EBRD a unique perspective. "I want to share with the Yugoslav authorities the Bank's own lessons learned," said Mr Lemierre. He said that those countries that have embraced reform have clearly progressed further than those economies that have not.
The regional impact of Yugoslavia's membership of the Bank is also a significant and positive dimension, said the EBRD president. He said: "A large void is being filled, leading to new regional opportunities. South-east Europe is standing on the verge of a new era of stability, growth and prosperity."
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