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New EBRD investments bolster Romanian reforms
Bank targets urban infrastructure, small business and foreign direct investment
The European Bank for Reconstruction and Development is making four new investments in Romania that will help upgrade infrastructure in the industrial town of Brasov, develop the country's small-enterprise sector and promote foreign direct investment. The EBRD, which last year committed €282 million in Romania, bringing its total level of investment in the country to more than €2 billion, said encouraging signs of reform are creating wider opportunities for the Bank to do business. Tomorrow, the EBRD begins its two-day Annual Meeting in Bucharest.
Speaking in Bucharest, Jean Lemierre, the EBRD's President, said the new investments will foster development of various parts of Romania's growing economy. He added that a revitalised reform effort means the EBRD is in a position to do higher volumes of business to help underpin that growth. "Reform and growth go hand in hand - it is a virtuous circle and one the EBRD is well positioned to support," Mr Lemierre said. In total, the EBRD's new investments amount to nearly €200 million.
Two new EBRD investments were signed today:
In Brasov, an EBRD loan of €14.5 million to local water utility Compania Apa Brasov will help upgrade water and waste-water services at the Tarlung treatment plant, which serves more than 400,000 people. The loan is part of an €58.7 million EBRD programme to help rehabilitate water and wastewater infrastructure in towns across Romania, under which investments have been made to date in Constanta, Iasi and Arad. The EBRD loan is co-financed by the European Union under its ISPA programme.
A €10 million credit line to Romania's Banc Post will support the country's SME sector. The main obstacle in Romania to business development continues to be access to small business funding. The credit line is from a joint European Union/EBRD programme to support SMEs in the accession countries. It is the first time this programme has supported Banc Posts lending to small enterprises.
A third EBRD investment was finalised:
A €2 million investment for a 22.5 per cent share in Micro-Finance Bank Romania - which today received its banking license - builds on the EBRD's support to micro finance throughout the region, including much of southeastern Europe. The investment is expected to be followed by a $6 million EBRD loan, partly financed by the United States, which will set up together with the EBRD a fund to support SMEs in the region.
And outline terms of a fourth investment were agreed as well:
The EBRD also agreed in principle basic terms and conditions for a $150 million (€173 million) pre-privatisation loan to Petrom, Romania's state-owned oil company that is to be privatised by next year. Of this, the Bank would expect to syndicate $40 million to commercial banks and $10 million to the Black Sea Trade and Development Bank. The project is expected to be considered by the Bank's Board of Directors towards the end of May and signed shortly afterwards. This is the second major restructuring deal contemplated by the Bank in a year, following last autumn's privatisation of steel company Ispat Sidex.
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