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EBRD adopts new strategy for Bulgaria
In its latest strategy for Bulgaria, the EBRD says the country has achieved impressive macroeconomic stability over recent years, but challenges still loom, especially in improving the country’s business climate and pushing forward large-scale privatisations to attract much-needed foreign direct investment. It is the first strategy issued by the Bank under the new Public Information Policy where the public have been invited to comment ahead of its publication and for the first time will be available in the Bulgarian language.
The paper, issued today on the Bank’s website, www.ebrd.com, analyses the country’s progress in political and economic transition and outlines its priorities in Bulgaria over the next two years. Priority areas will be private sector development, support for infrastructure projects, as well as policy dialogue with the authorities to help improve the investment climate.
Bulgaria has established impressive macroeconomic performance and strong financial discipline since 1997. Gross Domestic Product growth has been robust, reaching 4.8 per cent in 2002, and is expected to reach 4.5 per cent in 2003 and remain at a similar rate in the near future. Olivier Descamps, Business Group Director for southern and eastern Europe at the EBRD, said the Bank's activities have increased substantially in Bulgaria over the past two years, reflecting the positive economic developments in the country. And yet, while progress has been substantial, the EBRD’s latest Transition Report warns there is a need for continued progress to complete the reform agenda, arguing that this is necessary to position Bulgaria as an FDI location of choice and to help support its eventual accession into the European Union.
To help speed up reforms and address some of the challenges facing Bulgaria, the EBRD’s latest strategy will specifically support:
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Private Sector development, especially by promoting post-privatisation investment and greenfield private sector projects in industry, tourism, agribusiness and natural resources. An ongoing priority will also be support for micro enterprises and SME entrepreneurs, especially through credit lines offered via local banks. The Bank will also place emphasis on supporting the non-banking financial institutions sector, including the development of a three-pillar pension system, private insurance markets, leasing and mortgage financing.
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Infrastructure development, especially for energy and energy efficiency projects, for the development of municipalities – by supporting the decentralisation and commercialisation of the Municipal and Environmental Infrastructure sector by increasing the share of private sector involvement, and for telecommunications projects. The Bank is ready, for example, to support and facilitate the privatisation of the incumbent operator Bulgarian Telecommunications Company, through post-privatisation long-term financing.
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Co-Financing and Pre-Accession Funds. The Bank will continue to be a major catalyst in mobilising co-financing, both commercial and donor. The syndication of project financing to both foreign and local commercial banks will therefore be strongly sought, as will co-financing opportunities with other international financial institutions and EU programmes to address, among other things, the environmental or social components of projects.
Mr Descamps said, the EBRD will continue to support Bulgaria on all levels, including policy dialogue, to help improve the business climate. He added that one of the main impediments to attracting foreign investment is a weak judiciary and public administration reform system. There have been some positive and necessary changes in legislation, but more implementation is needed if Bulgaria is to become an investors’ choice for investment, he added.
The EBRD is the largest investor in Bulgaria with over €784 million committed to 54 projects across the country. Moreover, the Bank expects another record year in 2003, with investments expected to reach €200 million. Working with its many partners, the Bank has mobilised a total of over €3.2 billion for projects across the country.
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