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EBRD adopts new Belarus strategy
The Board of Directors of the European Bank for Reconstruction and Development
has adopted a new strategy
for Belarus committing the EBRD to deepening its involvement with the
private sector over the next two years, particularly in the area of
microfinance and small business lending. However, it once again reiterated
serious concerns over political developments, saying there had been
significant backtracking in some aspects of democratic governance.
On the economic front, the EBRD said that although macroeconomic management
had improved, there had been very little progress in structural and
institutional reform, a goal essential to achieving sustainable long-term
growth. The Bank said the law on “golden shares” giving the government the
right to take control of private enterprises remained a serious concern, but
welcomed the exclusion of the banking sector from the law’s sphere of
application.
As part of the Bank’s efforts to maximize its impact on private sector growth,
the EBRD is actively working on a proposal to create a microfinance
institution in Belarus and will also consider increasing its provision of
credit lines to privately-owned banks to support micro, small and medium-sized
enterprises. The EBRD is already the key player in this sector.
Under current conditions, the EBRD sees providing enhanced support for private
sector development as the most appropriate way for the Bank to maintain and
grow its engagement in Belarus. As under the previous strategy, all EBRD
operations must demonstrate that proposed investments are not effectively
controlled by the state or state entities.
The Bank will continue to remain engaged in Belarus, despite the persistent
lack of progress in government policies favouring democracy and market
formation, so long as it can contribute to the development of a dynamic
private sector and an entrepreneurial class. It will continue to engage
actively in policy dialogue with the authorities over a range of issues
related to the political situation, economic reforms and improvement in the
business environment.
The new Strategy document speaks of inconsistencies in Belarus’s commitment
to, and application of, the principles of multi-party democracy, pluralism and
market economics outlined in Article 1 of the agreement establishing the EBRD.
However, should substantial progress be achieved in democratic reforms and
should the Belarus authorities embark on a consistent programme of economic
liberalisation and reform, the EBRD, as in previous strategy periods, stands
ready to expand its operations beyond the private sector in order to support
that process.
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