Positive developments outweigh negative in new EBRD report on economic transformation

By Anthony Williams
@ebrdtony

Countries where the European Bank for Reconstruction and Development (EBRD) invests have continued to roll out much-needed reforms, according to the Bank’s Transition Report 2018-19.

More action needed to tackle money laundering and terrorism financing.

Countries where the European Bank for Reconstruction and Development (EBRD) invests have continued to roll out much-needed reforms, according to the Bank’s Transition Report 2018-19.

The Bank’s latest Transition Report says that “while progress in the area of structural reform has been modest, positive developments outweigh negative ones in most of the economies where the EBRD invests.”

The EBRD reports annually on progress in economic transformation in the regions where it works to foster effective and sustainable market economies across three continents. 

Since last year, the EBRD has been judging transition progress according to six criteria, tracking the extent to which its economies are competitive, well-governed, green, inclusive, resilient and integrated – the qualities it believes are necessary to equip them for modern-day challenges.

The report saw progress in most of these areas but it did highlight a rising risk of insufficient steps to tackle money laundering and terrorism financing.

According to the Transition Report, a number of countries in south-eastern Europe (SEE) and eastern Europe and the Caucasus (EEC) have seen progress in scores for competitiveness, mainly reflecting further improvements in their business climate.

Improvements in governance were concentrated in the EEC region, driven by some progress in the transparency of government policymaking, the growing availability of frameworks for challenging regulations and better protection of private property.

Many countries have achieved modest improvements in their green scores, following ratification of the Paris Agreement and the adoption of legislation strengthening their commitment to reducing greenhouse gas emissions and tackling climate change.

The EBRD reports uneven progress on inclusion, where it looks at the areas of youth, gender and regional inclusion.

Progress has also been uneven for resilience, primarily equipping economies to deal with future shocks.

Progress in the area of financial resilience has been very modest but energy resilience appears to have improved in many economies across the EBRD regions. Ukraine has been the standout performer in this area, thanks to significant improvements in the legal and regulatory framework governing the energy sector.

The SEE and EEC regions have also seen some improvements in integration, largely owing to improvements in the quality of logistics services and related infrastructure.

The report said the risk of inadequate compliance with frameworks aimed at combating money laundering and the financing of terrorism had increased in a number of southern and eastern Mediterranean, Central Asian and south-eastern European economies. Several economies had seen declines in the perceived transparency of government policymaking, the report added.