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New EBRD Poland strategy to help promote growth
Bank expects to sign €130 million loan to support rail restructuring and development
The EBRD will concentrate its future activities in Poland on sectors that can best promote growth and help the country's eventual accession into the European Union. In its new strategy, published today on www.ebrd.com, the Bank describes an increasing focus on investments in municipal infrastructure, banking and non-banking institutions, small businesses, large-scale industries and agribusiness. Alain Pilloux, Business Group Director for Central Europe, said these are the areas in which the EBRD is best placed to make a difference.
The Bank also expects to sign one of its largest ever loans in Poland tomorrow (Tuesday 19 March), to Polskie Koleje Panstwowe S.A (PKP), the national railway, to support its ongoing restructuring and development. The €130 million loan, together with over €2 million which has been provided in technical cooperation funds by the EU, will help PKP undertake financial restructuring to support its new subsidiaries. This builds on a €100 million loan from the EBRD in 2000, which helped finance the company's labour restructuring scheme to boost productivity. The PKP loan illustrates the Bank's new strategy to support the country's ongoing development.
Having invested over €2.5 billion in Poland - including €588 million last year alone - and mobilised an additional €8.6 billion, the EBRD has played a pivotal role in promoting Poland's reform over the past decade. The Bank will also continue to help marshal grants from donors to strengthen legal, regulatory and other institutions, and to support intense policy dialogue. The strategy puts the Bank in a stronger supporting role, pinpointing activities that could have the most impact, and should ultimately help attract additional foreign investment, which is critical to ensure future dynamic growth.
The strategy stresses that a key priority for the recently elected coalition government will be to accelerate structural reform so as to achieve robust growth and increase productivity and competitiveness in the economy. There is a need to accelerate investment in infrastructure, at both the national and local levels, attract foreign investment, support the development of new businesses, improve the value-added of Polish output and facilitate trade to more diverse markets. Moreover, the strategy says the authorities must restructure and privatise public utilities, and complete the modernisation of non-competitive state-owned banks and industrial companies that continue to strain the central budget.
The EBRD will aim to help address these key areas. In particular, the Bank will boost investments in infrastructure - such as through the forthcoming PKP loan - and in environmental projects in municipalities. The Bank will attempt wherever possible to make these loans without relying on a sovereign guarantee. Late last year, for example, a €16.7 million non-sovereign Bank loan helped the city of Rybnik make waste-water collection more efficient, reduce public health hazards and cut pollution levels in local rivers. The EBRD has already invested €158 million in municipal projects across Poland.
Likewise, the EBRD will stand ready to assist the process of modernising existing large-scale industries to improve efficiency and promote competition. And at the same time it will develop new projects to promote regional growth and provide employment opportunities.
In the financial sector, the Bank will support non-bank financial institutions, including those that provide pensions, insurance and mortgage finance, and also aim to strengthen the banking sector through modernisation and some consolidation. The EBRD will continue to work with local intermediaries and other institutions to strengthen small and medium-sized enterprises. Recently, the EBRD, working with the EU, provided loans to two Polish banks to on-lend to small businesses across the region. In Poland alone, the Bank has to date provided over €100 million to support SMEs.
Another key challenge for the authorities is the development of Poland's agribusiness sector. The EBRD's strategy highlights where the Bank could play a role: by improving competition, providing finance to develop businesses and improving production standards of locally produced food products. The Bank will also continue to work with other government and multilateral institutions. In 2000, for example, a €32 million facility was set up by the EBRD with the EU to provide finance to local banks to support Poland's dairy sector.
The EBRD is aware of the challenges of the region and, working with the local authorities, revises its country strategies every two years with the aim of making the fullest impact on the countries as they develop towards a market economy.
The EBRD's Annual Meeting will be held in Bucharest, May 19-20. Visit the EBRD's website at: www.ebrd.com
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