Speech delivered by: Andras Simor
Event: International donor conference for Bosnia and Herzegovina and Serbia
Date: 16 July 2014
Andras Simor, EBRD Vice President, Policy, delivered this statement to the international donor conference for Bosnia and Herzegovina and Serbia after the floods on 16 July 2014 in Brussels.
Your Excellencies, Ladies and Gentlemen,
It is my pleasure to participate in today’s donor conference for Bosnia and Herzegovina and Serbia after the floods.
We have reviewed the recovery and reconstruction needs assessments for the two countries. We would like to thank our colleagues from the European Union, World Bank and United Nations for this work. It allows us to target the areas most in need, in line with the EBRD mandate.
Both the EBRD President and I have visited some of the flooded areas and met with the authorities in late May. Our visits were followed by thorough discussions with our clients in the public and private sector, and with the authorities, to determine where we could best deploy our expertise and tailor our possible contribution to the recovery efforts.
We have also closely coordinated our exploratory efforts with other international financial institutions (IFIs) and donors, most importantly with the joint EU-World Bank-UN task force and with our co-financiers in public sector projects, such as the EU, the European Investment Bank and the World Bank. We expect that most of our flood response financing will be done jointly with other IFIs and donors, including the European Union and the European Investment Bank. Our extensive experience of combining donor financing with EBRD financing enables the efficient implementation of joint projects.
Earlier this year, the Board of Directors approved new EBRD strategies for both countries. The Bank provides approximately €800 million to €1 billion annually for Western Balkans countries, including about €150 million for Bosnia and Herzegovina, and €400 million for Serbia. Our flood response activities should be therefore seen in the overall context of EBRD operations in this region.
In the public sector, we are ready to review our involvement in the rehabilitation of infrastructure by reallocating funding within existing projects and providing new funding.
In Bosnia and Herzegovina, we have offered the authorities an option to reallocate €7.8 million in previously approved loans to railways, and to provide a further €10 million in new loans to the railways, plus €40 million to road companies. Our total contribution for flood reconstruction and recovery in the public sector could thus reach up to €57.8 million.
In Serbia, in the transport sector, we are ready to consider the reallocation of €30 million for roads and €30 million for railways. In the natural resources and energy sectors we can consider the reallocation of €40 million of an existing loan, and the provision of €200 million in new loans to the electricity utility EPS. Our total public sector contribution – consisting of both reallocations and new loans – would then reach €300 million, although more funds are available for reallocation.
In addition, financing for small and medium-sized municipalities is available from the €100 million Municipal Infrastructure Development Fund. Resources from this EBRD co-financed fund can be used to help rehabilitate municipal infrastructure in flood-affected areas.
The EBRD is also ready to consider flood-prevention measures on a regional basis in cooperation with other IFIs and donors.
In the private sector, the EBRD will use the recently approved or soon to be approved regional facilities (the Western Balkans and Croatia Finance Framework IV, the Local Enterprise Facility and the Enterprise Expansion Fund), details of which were presented at the EU-hosted High Level Meeting of international donors held in Paris on 8 July 2014.
€50 million from the Western Balkans and Croatia Finance Framework IV have already been deployed in Serbia. Two facilities (mortgage loans and an SME credit line) are designed in such a way that both could be used, as and where required, to finance sub-projects in zones affected by the floods. The use in those zones will depend on the actual demand.
In addition, the EBRD and EU are discussing potential support for financing urgent investments by SMEs in Bosnia and Herzegovina. A total of €4-6 million in grants from the EU would mobilise at least €20-30 million in new lending for investment projects, to be available this year or at the latest by mid-2015.
The Bank is also testing and working on a new product that will target the agricultural sector. This will be particularly important following the flood damage. Grant funds are needed to provide direct incentives which, when combined with EBRD loans, are an efficient and cost-effective way to reach farmers and investors in related equipment and infrastructure.
Overall, the EBRD will step up new financing for the private sector in Bosnia and Herzegovina and in Serbia to support economic recovery following the floods. These funds, and the credit lines in particular, will not only target flood victims, but will also support wider economic recovery. The availability and extent of donor co-financing for various facilities will be critical for reaching targeted groups of potential clients.
I have presented today the significant resources that can be made available by the EBRD for reconstruction and recovery in Bosnia and Herzegovina and in Serbia after the floods.
In the public sector, the EBRD is ready to work closely with the authorities, and with IFIs and donors, to reallocate existing resources and provide new loans for infrastructure rehabilitation. On the basis of exploratory discussions to date, we expect that these would amount to €57.8 million for Bosnia and Herzegovina and up to €300 million for Serbia, subject to formal requests by the authorities and our internal approval process.
A significant part of our financing and efforts will focus on the private sector, with a comprehensive range of instruments. In this area we will seek close cooperation with other donors to maximise the effectiveness of available financing, particularly for the agricultural sector.
Thank you for your attention.