EBRD to help break reform deadlock

By Anthony Williams
@ebrdtony

EBRD President Sir Suma Chakrabarti today set the Bank on a new course to rekindle the process of reform and prepare the road for stronger growth and higher living standards in the countries where it invests.

Speaking at the opening session of the EBRD’s Annual Meeting in Warsaw, Sir Suma said the EBRD had had a successful year in 2013, investing €8.5 billion in a near record of 392 projects which had helped drive transition forward.

But the picture was not all positive. “We have to be honest about the challenges that many of our countries face. A number are `Stuck in Transition’,” he said.

He referred to a marked slowdown in reforms in many countries in the EBRD regions and said the financial crisis had not helped. This was having a negative impact on the growth outlook and slowing down the convergence with living standards in western Europe.

At the Warsaw Annual Meeting he would make a proposal to shareholders on new ‘medium-term directions’ that address that challenge of re-energising transition via three priorities.

Firstly, the EBRD would help to build resilience into the transition process, in terms of sound institutions, inclusion and economic structures.

“It is the task of Governments to adopt policies that hasten transition. It is the role of the EBRD to help Governments in our regions of operation formulate those policies and build those institutions. It is also the role of the EBRD to provide the finance, largely to the private sector, for projects that will have sustainable impact because the right policies and resilient institutions are in place,” Sir Suma said.

Second, the EBRD would promote economic integration both globally and regionally and third it would aim to do much more to address common global challenges such as climate change, water scarcity and food security.
In the context of helping to drive the transition process forward, Sir Suma referred specifically to Ukraine from where he had travelled to Warsaw. Ukraine was an example of what the Bank's medium-term directions really meant when they were translated into practice.

An agreement signed this week with the authorities in Kiev on an Anti-Corruption Initiative that aims to improve governance standards and the investment climate in the country would help to build Ukraine's resilience. It showed what could be achieved when the EBRD engaged in policy dialogue.

The EBRD would also help Ukraine by pursuing the other medium-term direction goals, working with companies and the government to try to improve exports, boosting regional and global integration.

The Bank would also aim to improve Ukraine’s energy security and the country's energy efficiency, a common global challenge in a world where energy security and climate change remain major challenges.

“We propose no revolutionary departure but an evolutionary approach where we draw on the Bank’s existing and proven capacities. But at the same time we want to bring these capacities together in a dynamic, results-oriented manner,” the President said.

In his speech, Sir Suma looked ahead to a decision on Thursday when shareholders would vote on whether to admit existing EBRD member Cyprus as a recipient of EBRD financing for a limited period.

“I trust Governors will vote strongly in favour of that tomorrow and we can help Cyprus transition through the difficult challenges that it confronts, supporting the Troika programme,” he said.

He also noted that Libya had asked to become a country of operations and said he also hoped for support for Libya to take the first step in this process by becoming a member of the Bank.

Sir Suma paid tribute to his Polish hosts in Warsaw as the EBRD Annual Meeting prepared to look back on the 25 years since the collapse of communist rule in Europe and the 10 years since 8 central and eastern European countries had joined the European Union.

“Poland has been at the heart of the transition success story, and is back as well at the heart of Europe. It is now a model for many others to follow,” he said.