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EBRD to assist Latvia with challenges of EU accession
Initially in the second group of countries to start membership negotiations with the European Union, Latvia has long since caught up with the forerunners and is set to join the EU in May 2004. Indeed, Latvia’s economic performance in recent years has been among the best of the accession countries. But while the country is forecast to sustain annual growth rates of 6 per cent over the medium term, important challenges remain to finalise the transition process, as the EBRD spells out in its latest strategy for Latvia, now available on www.ebrd.com.
To keep the country’s finances strong and to continue to attract foreign direct investment, the EBRD recommends more prudent fiscal policies and continued progress with reforms, such as efforts to improve the efficiency and transparency of public administration. Efforts are also needed to further reduce corruption and complete the privatisation process.
Based on its analysis of current and prospective challenges, the EBRD will in coming years focus its activities in Latvia on:
• Supporting large-scale foreign direct investment projects, as well as investments in the manufacturing and service sectors by medium-sized foreign and local companies. In addition to projects in Latvia the Bank will focus on cross-border investments, particularly into Russia and other CIS countries. Attention will be given to improving corporate governance, transparency and accountability, and increasing competitiveness.
• Developing financial products that are currently not well supplied, such as equity, and a broader range of finance for small and medium-sized enterprises (SMEs) with the aim of fostering regional development. The Bank will target the development of non-bank financial institutions such as leasing companies, pension funds, insurance companies and equity funds.
• Financing state-owned and municipal entities to support important infrastructure projects, while facilitating private-sector participation. Financing will be provided, where feasible, on a non-sovereign public or private basis. Priorities will be the transport sector and municipal infrastructure. The Bank is committed to assisting authorities to prepare, co-finance and implement projects that would be eligible for EU funds.
• Working with the state-owned energy provider Latvenergo to encourage the establishment of separate entities for power generation, transmission and distribution and for the company’s participation in the regional energy market.
As of 30 September 2003, the EBRD had signed 24 projects in Latvia with a total project cost of more than €1 billion. The private sector today accounts for 74 per cent of the Bank’s portfolio in the country.
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