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President Lemierre re-elected to second EBRD term

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Jean Lemierre, EBRD President, speaking at the opening of the Board of Governors Annual meeting

- says Bank will emphasise investment in poor countries

The EBRD will raise its investments in the seven poorest countries in its region of operations, President Jean Lemierre told the annual Board of Governors meeting in London today. While holding steady in Russia and the Balkan region, the Bank’s role in eight eastern European countries joining the European Union on May 1 is shifting in tandem with changes in those ‘accession countries’ economies.

The assembled Governors re-elected Mr Lemierre to a second term as EBRD President.

“Since the EBRD opened its doors 13 years ago, the countries of the region have come of age, each in its own way,” said Mr. Lemierre in his remarks to the Board. “Each country has, to varying degrees, made progress in the transition to a full market economy.”

However, he noted that transition has been painful for some and the cost of complacency in the face of these difficulties visited on certain segments of society “could be disillusionment and social and political tension”.

Investment a means to an end

Mr Lemierre reminded the Governors that the long-term goal of transition is that people ultimately enjoy “longer healthier lives, the opportunity to learn, work and live decently. People today expect basic social services as well as the advantages of a more democratic society where they can be heard, and there is tolerance and transparency.” The Bank’s dialogue with governments across the region “helps us all to understand and address the priorities for economic and social development”.

He pointed out that in many countries in the region, prosperity fostered by transition resides in the big cities, while lack of opportunity and investment means living standards have fallen in smaller centres, particularly in rural areas. This is true in both the relatively wealthier EU accession countries and in the region’s poorest countries.

“The Bank is striking out into the rural areas and smaller towns where there is much need and many opportunities to invest in the agribusinesses, municipalities, manufacturing and small and large enterprises of the real economy.”

Ongoing investment in accession countries

In the accession countries, commercial capital is increasingly available to many sectors of the economy. So the EBRD’s focus is shifting to those sectors where capital is still difficult to access and/or the EBRD has particular expertise otherwise unavailable, such as in small and medium-sized businesses, municipalities, in developing banks and other financial institutions, and in restructuring key industries.

Poorest countries need special attention

Mr Lemierre joined UK Prime Minister Tony Blair and Luxembourg Prime Minister Jean-Claude Juncker (representing their respective governments at the meeting) in emphasising the need for greater Bank activity in the poorest countries of the EBRD region: Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan. These countries are at the earliest stage of transition and the Bank has adapted its investment model to accommodate the realities of doing business in these less-developed economies.

Said Mr Lemierre: “We will finance the kind of projects that we have found work best in these circumstances: small businesses, microfinance, investment to facilitate cross-border trade, small-scale infrastructure. The Bank is ready to take on the risk as we seek to invest more in countries at the earlier stages of transition. We will use adapted tools that streamline approval processes and, for example, make legal requirements easier by conducting more transactions under the terms of local law. There will be more Bank staff and resources devoted to these countries.

Donor support complements finance

“We cannot do this on our own,” Mr Lemierre continued. “In order to strengthen the initiative, the Bank has invited donor countries to contribute to provide technical cooperation, and to help prepare and co-finance projects. But the EBRD takes the full burden of added risk on its own books.”

The President concluded by reminding his audience that “market economies will only work well in the long term if progress is widely shared and people have a right to be heard. Whether it is in the most or in the least democratic environments, it is the voices of the people that set the political agenda for the long term, and we in the EBRD pay a lot of attention to this.”

19 April 2004