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Record €2.3 billion EBRD investment in Central Europe, Baltic states

By Svitlana  Pyrkalo

People walking around a busy area

  • EBRD invests a record 2.3 billion in Central Europe and the Baltic states
  • Poland absorbs a record 990 million; Slovenia, Hungary, Lithuania at all-time high
  • Seventy per cent of investment supports low-carbon transition

The European Bank for Reconstruction and Development (EBRD) invested a record amount –  €2.35 billion – in Central Europe and the Baltic states (CEB) in 2022, following unprecedented demand from the industry and banking sectors in the wake of Russia’s invasion of Ukraine.  

In the spirit of “building back better”, 70 per cent of the Bank’s investment in CEB went into projects furthering green economy transition, from new renewable-energy generation and e-vehicles to green bonds and similar instruments.

The Bank stepped up in the region to ease the multiple pressures of last year, from the cutting-off of Russian gas supplies to many countries in the region to the capital market instability due to the Russia-Ukraine war, which initially caused private foreign investment to dry up.

Record EBRD commitment in 2022, provided through 66 banking projects (not including the continuous provision of trade finance), was one of the factors supporting the region during the challenging times, before investment sentiment recovered at the end of the year.

Poland, Slovenia, Hungary and Lithuania absorbed record amounts of EBRD financing, exceeding previous crisis peaks such as in the Covid-19 pandemic.

In Poland in 2022, the EBRD committed €990 million, making it the Bank’s fourth-largest market last year after Türkiye, Ukraine and Egypt. Eighty per cent was provided to low-carbon transition projects. The largest investment, equivalent to €170 million in zloty, was in sustainability-linked bonds of Cyfrowy Polsat, to support the Polish telecoms and media group’s expansion into renewable energy.

Croatia’s annual EBRD business volume reached €297 million and included post-earthquake reconstruction and the first renewables project fully reliant on market mechanisms, free of state subsidies.

Investment of €265 million for Slovenia supported energy and the financial sector.

Hungary’s record annual EBRD investment of €215 million focused on banking-sector support, enabling further lending to green transition projects.

€111 million went to the Czech Republic, which re-applied for EBRD support during the Covid-19 pandemic after “graduating” in 2007.

The remaining funds were invested in Lithuania, Latvia and Estonia where the combined demand was also at record highs; a separate EBRD announcement will detail those investments next week.

The EBRD also provided record support to Ukraine, the region’s neighbour under attack, which will help Ukrainians restore some of the civil infrastructure destroyed by the Russian invasion and missile attacks and will reduce the likelihood of a second wave of refugees.

A number of EBRD private-sector clients in Central Europe have created hundreds of vacancies for displaced Ukrainians, mainly women.

Charlotte Ruhe, EBRD Managing Director for Central and South-Eastern Europe, said: “The EBRD showed its readiness to respond to the needs of our clients across Central Europe and the Baltic states in 2022.  As countries close to Ukraine, their economies were impacted by multiple shocks:  dislocated markets, energy price hikes, rising interest rates and inflation. The Bank’s record levels of investment helped address these shocks and fill financing gaps, particularly in capital markets.”

A new EBRD economic forecast for Central Europe and the Baltic states will be issued on 16 February and is expected to be cautiously optimistic about the region’s prospects for 2023.

Total EBRD investment in 2022 exceeded €13 billion for the first time.

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