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EBRD responds to coronavirus with record high H1 investments

By Anthony Williams

Financing tops €5 billion to support Covid-19 response and recovery

Investments by the European Bank for Reconstruction and Development (EBRD) leapt to a record high in the first half of 2020 as the Bank responded rapidly to the needs of emerging economies grappling with the impact of the coronavirus.

Financing rose to just over €5 billion in the first six months of the year, compared with €3.7 billion a year earlier and a previous first half record of €3.9 billion in 2016. The Bank complemented its increased financing with scaled-up policy support.

The EBRD invests to promote sustainable and inclusive private sector development across 38 emerging economies ranging from Estonia to Egypt and Morocco to Mongolia.

The economic impact of Covid-19 on the EBRD regions has been severe and in its latest forecast in May the Bank warned of “unprecedented uncertainty”.

In March the EBRD unveiled its coronavirus Solidarity Package – a series of measures put in place to meet the regions’ immediate needs while also preparing for robust recovery once the pandemic is over.

A key pillar of the Solidarity Package is a framework providing emergency liquidity and working capital to existing clients.

Demand for the emergency funding has been strong and the new facility accounted for over €1 billion of total EBRD financing in the month of June alone.

In April the EBRD said it would dedicate the entirety of its activities to tackling the Covid-19 pandemic and that it expected to invest some €21 billion through to the end of 2021.

Since the outbreak of the virus, the pace of disbursements has been consistently faster than in 2019.

Donors have stepped up to support the Bank’s Solidarity Package with a record volume of contributions for the first half of the year, providing much-needed grant and concessional co-financing.

Covid-19 has severely affected trade flows and access to trade finance, so the EBRD has increased support for commerce under its Trade Facilitation Programme.

In the first half of 2020 the Bank financed over 1,000 trade deals with a record turnover of €1.9 billion. It has raised its total exposure limit under the programme by 50 per cent to €3 billion.

In addition to focusing on the immediate response to the coronavirus, the EBRD is working to ensure that recovery from the pandemic will be resilient and sustainable and in line with global climate goals that preserve commitments to a low carbon economy.

In July the EBRD unveiled ambitious proposals to become a majority “green” bank by 2025.

The first project rolled out under the Solidarity Package was a €145 million facility for Bank of Africa - BMCE Group in Morocco that delivered trade support as well as finance for firms that had seen a decline in turnover and profitability.

A €25 million EBRD loan to Netlog Logistics, a provider of logistics services in Turkey, helped maintain the flow of essential goods in the country, strengthening supply chains in the face of challenges caused by Covid-19.

In the Kyrgyz Republic, a financing programme from the EBRD, the European Union (EU) and the European Investment Bank (EIB) improved the waste management services available to over 300,000 residents in Osh City and neighbouring municipalities, raising health standards during the coronavirus pandemic.  

The EBRD continued its drive to support green transition in Poland, with five loans to expand the country’s renewables portfolio.

The EBRD scaled up financing for key banks in Serbia to support small and medium-sized enterprises affected by the coronavirus, making loans available via the Serbian subsidiaries of Banca Intesa, Erste Bank, Eurobank, ProCredit Bank and UniCredit Bank.

In Ukraine, an EBRD investment in major retailer Fozzy Group will provide consumers in the country with better and safer shopping standards, with funds also supporting the launch of the first “green” supermarket in Ukraine.

In addition to its financial investments, the EBRD has concentrated on its policy work to help the economies in its regions respond to the impact of the pandemic.

As a result there have been positive developments in the renewables industry in Kazakhstan, while in Egypt amendments to securities legislation, supported by the EBRD, are expected to bring in more international investors.

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