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EBRD makes €18 million Yugoslav private-sector loan
Bank to increase support to private sector enterprises and boost export markets
The European Bank for Reconstruction and Development is providing €18 million to Hemofarm, a leading pharmaceutical company in the Federal Republic of Yugoslavia, marking the Bank's first loan to a private local company in the country. The 6-year credit will support Hemofarm's expansion to meet increasing demand for its medicines both at home and from markets abroad. Development of the private sector in Yugoslavia has been severely constrained for more than a decade and companies like Hemofarm, which itself employs 2000 people, have no access to term finance locally.
Olivier Descamps, the EBRD's Business Group Director for Southern and Eastern Europe, said the challenge in 2002 would be to provide longer-term financing that could help larger industrial companies become more efficient and profitable through investment.
Hemofarm was established in 1960 and is currently the largest pharmaceutical company in Yugoslavia. It is undergoing an upgrading of its present facilities and improving efficiency to increase production. Demand has increased particularly from foreign clients in Bosnia Herzegovina, FYR Macedonia, Romania and Russia, its largest market. Mr Descamps said: "The EBRD wants to assist Yugoslavia in recovering its export markets to create jobs and stimulate growth at home."
''This Loan from EBRD is of great significance for Hemofarm's further development maintaining product quality and expanding export'', said Mr Miodrag Babic President of Hemofarm Concern.
The EBRD last year invested €230 million in Yugoslavia. Becoming a shareholder in the Micro Enterprise Bank in April last year, the EBRD earlier this year became an equity holder in local Yugoslav bank Eksimbank. In November, the EBRD provided a short-term working capital loan to Tigar, a local manufacturer of tyres. In addition, the EBRD channelled a large part of its investment, helping to upgrade transport, power and municipal infrastructure.
Mr Descamps said that the EBRD would continue to place infrastructure high on its list of priorities, but that the private sector would account for an increasing portion of the Bank's business. "We want to show investors that there are good quality, well managed companies in Yugoslavia," he said. That will involve selecting well managed, privately owned or recently privatised companies that have clear financial accounts and credible business plans. "Our aim is to develop good sound investment in Yugoslavia," Mr Descamps added.
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The EBRD aims to foster the transition from centrally planned to market economies in central and eastern Europe and the Commonwealth of Independent States. It is owned by 60 countries, the European Investment Bank and the European Community.
The EBRD holds its Annual Meeting in Bucharest, May 19-20.
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