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EBRD adds initiative on larger Yugoslav companies
Innovative working capital plan underscores Bank's commitment to private sector
The European Bank for Reconstruction and Development is making available up to €65 million of working capital financing to large state or socially owned or private companies in the Federal Republic of Yugoslavia.
The €65 million Working Capital Facility was signed in Belgrade today by senior representatives from the EBRD, the Federal Government of Yugoslavia, the Republic of Serbia and the Republic of Montenegro. Noreen Doyle, the EBRD's First Vice President, said the Bank had put together this exceptional framework to respond quickly to the perceived needs. She said Yugoslavia had good companies with a strong track record of exporting competitive products, but that they required money to relaunch business and once again try to resume a strong presence in international markets. Ms Doyle called the Bank's investment a unique project for a unique situation.
The framework is aimed at companies awaiting privatisation and which have close working relationships with international companies. The plan is to provide individual loans of €3 million to €10 million to revive production, increase the use of existing capacity and improve profitability. The EBRD expects the selected companies to be in the forefront of privatisation and re-energise the country's flagging export sector.
Ms Doyle said that chosen companies are expected to demonstrate high standards of corporate governance, and have a track record of foreign currency sales and earnings. They should also prove attractive to potential strategic investors through the quality of their production and marketing, she added. The EBRD will sign agreements for the first investments within the next six weeks. The framework is the first comprehensive attempt to encourage foreign investment in large local industrial companies since elections in October last year.
Earlier this year the EBRD supported the opening of the Micro Finance Bank, the first bank to offer loans in the country on commercially competitive terms. Since opening in April, the MFB has provided over 600 loans worth a combined DEM 8.5 million. The EBRD is a shareholder and a significant lender to the bank. During her visit today, Ms Doyle visited Castra, a small business in Belgrade that produces shampoo and other hygiene products. Castra received a loan in May to purchase a new bottling machine, essential for the business to expand production level.
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