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New EBRD strategy for Lithuania to focus on private sector
Since regaining independence in 1991, Lithuania has made substantial progress
in structural economic reforms. An outstanding performance with a growth rate
of 8.9 per cent in 2003 was accompanied by impressive fiscal consolidation,
and this May Lithuania will become a member of the European Union.
Nevertheless, the country’s economic structure does not yet reflect that of
advanced industrialised economies, as the EBRD concludes in its latest
strategy for Lithuania, now available on www.ebrd.com.
The main challenges for Lithuania will be to strengthen domestic savings,
improve living standards and make high rates of domestic investment less
reliant on foreign financing. Structural reforms such as improvements in the
business environment, further commercialisation and deregulation of
infrastructure, and a strengthening of non-bank financial institutions are
necessary as well. While unemployment is falling, regional disparities are
high and rural poverty is widespread.
The EBRD stands ready to help Lithuania meet these challenges. The latest
strategy envisions the bank focusing its activities in Lithuania on the
following priorities:
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In the private sector the Bank is ready to support large projects that
encourage the inflow of investment. It will support the expansion of
Lithuanian companies in the region and the improvement of corporate governance
standards. The Bank will focus on the development of small and medium-sized
enterprises through equity funds and by providing long-term finance to the
financial sector.
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In the energy sector the Bank is prepared to support the restructuring
of the power sector, priority investments into available generation capacity
and transmission systems. The Bank will support the development of the Common
Baltic Electricity Market. Furthermore, it is ready to support renewable
energy sources and energy-efficiency projects.
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In the municipal infrastructure sector the Bank will focus on
developing lending on a sub-sovereign basis to support environmental, urban
transport and district heating projects. In transport infrastructure the Bank
will work with the European Investment Bank and EU funds on suitable transport
projects, primarily to improve North-South road freight routes and access to
ports.
As of year-end 2003 the EBRD had signed 27 operations in Lithuania worth €973
million. The private sector today accounts for 62 per cent of the Bank’s
portfolio in the country.
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