EU: EBRD shareholder profile

The EU owns 3 per cent of the EBRD’s capital. The European Union, the European Investment Bank (EIB) and the EU member states combined own 54 per cent of the EBRD’s capital.

 

As the largest single donor to the EBRD, the EU has accounted for about 40 per cent of total donor funds channelled through the EBRD since the Bank’s inception. In 2021 the Bank received over €293 million^[1] in contributions from the EU, which represents more than 40 per cent of the total donor funding provided for EBRD projects that year. 

Funding channels include the Instrument for Pre-Accession Assistance (IPA) for Turkey and the Western Balkans, the European Neighbourhood Instrument for countries on the eastern and southern edge of Europe and the Development Cooperation Instrument financing EBRD projects in Central Asia. EBRD projects in EU member states have also benefited from funding through the Structural and Cohesion Funds, European Structural and Investment Funds (ESIF), the Structural Reform Support Programme and the Horizon 2020 programme.

In addition to accessing EU funding on a bilateral basis, the EBRD is an active participant in the regional blending facilities, which combine grants with investments from European and International financial institutions. These include:

• the Western Balkans Investment Framework (WBIF),
• the Neighbourhood Investment Platform (NIP),
• the Investment Facility for Central Asia (IFCA),
• the Asia Investment Facility (AIF) and
• the External Investment Plan (EIP) which includes the European Fund for Sustainable Development (EFSD).

The EU Regional Trust Fund 'Madad' provides grants to support projects under the EBRD refugee response programme.

The EU is also critical to EBRD operations by supporting policy dialogue. The EU is a driver of policy and legislation in many countries in which the EBRD invests. In addition, the Bank cooperates with EU institutions on current and emerging policies, whether linked to IFI growth plans, environmental issues or initiatives such as Vienna 2.0, a private-public sector platform established to secure adequate capital and liquidity support by banking groups for their affiliates in central, eastern and south-eastern Europe.

EU funding is provided through regional loan/grant blending facilities as well as on a bilateral basis.

The Neighbourhood Investment Platform (NIP) supports projects in the transport, energy, financial, social and environmental sectors by combining EU grant resources with loans from European development financing institutions.

Projects co-financed by the NIP include the Saiss and Garet Water Project in Morocco, the Green Economy Financing Facilities in five SEMED countries, the Sisian-Kajaran Road Project, the Meghri Border Crossing Project and the Masrik Solar Plant Project in Armenia, the extension of the EBRD SME Financing Facility and the FINTECC programme in the Eastern Partnership countries, TC support for the protection of economic competition in Armenia and the ongoing municipal investment framework in Ukraine.

The EU’s Regional Trust Fund in response to the Syrian Crisis, the MADAD Fund, addresses educational, economic and social needs of Syrian refugees while also supporting overstretched host country communities and their administrations. The MADAD Fund co-financed the EBRD’s West Irbid Wastewater Network Construction Project in Jordan with an investment grant of €20 million in 2018.

The Investment Facility for Central Asia (IFCA) is key in supporting EBRD activities in Central Asia. It covers Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan. Since 2010, the IFCA and EBRD have had a very strong partnership with 90 per cent of IFCA funds allocated to the EBRD in the form of grants and risk sharing for EBRD investments across the region in the municipal infrastructure, SME and energy efficiency sectors. Recent projects co-financed by IFCA include new subprojects of the Kyrgyz Water Rehabilitation Framework, the extension of the regional SME Financing Facility and the Khatlon Energy Loss Reduction Project in Tajikistan.

The Asia Investment Facility (AIF) supports EBRD activities in Mongolia. The EU and the EBRD signed their first agreement under the AIF in 2015. The AIF co-finances EBRD projects to support economic diversification by providing access to finance for SMEs in Mongolia, to modernise the solid waste and district heating sector in the capital Ulaanbaatar and to establish flood protection and reduce water loss in the city of Erdenet.

The EBRD has been actively involved in the European Union (EU)’s External Investment Plan (EIP), which aims to increase the scale and impact of EU external development finance by leveraging private-sector investment. The EIP includes the new European Fund for Sustainable Development (EFSD), which combines existing blending facilities with a new guarantee facility.

So far, two EBRD programmes have been contracted:

·        the Framework to Scale up Renewable Energy Investments, worth €50 million in guarantees

·        the Municipal, Infrastructure and Industrial Resilience (MIIR) Programme, worth €100 million in guarantees.

The EFSD’s main focus on facilitating green transition has been temporarily re-focused to combat the negative impact of the Covid-19 pandemic. This will allow the EBRD and the EU to jointly respond to the crisis and foster the recovery agenda in the southern and eastern EU Neighbourhood, as well as in eastern Europe and the Caucasus.

Through these two programmes, the EBRD and the EU share the risk of non-payment of principal and interest, capped at a fixed percentage. Over a period of four years, the MIIR Programme will provide support for private-sector co-financiers, financial intermediaries or final beneficiaries in municipal, infrastructure or industrial projects, in order to:

·        provide the short-term liquidity needed to preserve businesses, assets and employment, and/or to further boost economic activity

·        scale up financing to accelerate the transition to green, low-carbon economies by enabling EBRD financing and technical support.

These investments are expected to finance dozens of firms, provide thousands of people with access to services, support employment, and contribute to energy and water efficiency. This will benefit the environment and build more competitive industries.

The European Union is EBRD’s biggest donor in the Western Balkans, with more than €700 million[2] of contributions over the last 5 years. These funds are provided through the  Western Balkans Investment Framework (WBIF) and on a bilateral basis, to support EBRD’s work in developing the private sector and building sustainable infrastructure in the Western Balkan countries. EU funding in the region supports inter alia programmes aiming at increasing the competitiveness of the SME sector and improving their channels of access to finance at both national and regional level. In addition, EBRD mobilises these funds to support infrastructure and energy projects of high transition impact.

EBRD has benefitted from the WBIF since its launch as a co-operation platform uniting beneficiaries, donors and International Financial Institutions (IFIs) in 2009. The WBIF supports socioeconomic development and EU accession across the region by blending technical assistance and investment grants from the EU’s Instrument for Pre-Accession Assistance (IPA) and contributions from bilateral donors with loans from IFIs. Sectors supported under the WBIF are digital, energy, environment, social, transport and private sector development.  

The European Western Balkans Joint Fund (EWBJF), managed by the EBRD and the EIB, is a multi-donor fund under the WBIF and the key instrument for pooling of grants and loans within the WBIF.

Since its inception,  the WBIF Steering Committee approved more than €600 million of grants for EBRD-led projects, out of which cc. €553 million will be financed by the EU.

The EBRD is also managing secretariats of two multi-donor, multi-agency Funds initiated by the European Union and totalling over €400 million:

The Northern Dimension Environmental Partnership (NDEP) fund, established in 2002, pools funds from donor governments and the EU which are used as grants for priority environmental and nuclear safety projects in the Northern Dimension Area (i.e. north-west Russia and Belarus).  Contributors to the Fund are the European Union, as the largest contributor, and 12 countries: Belarus, Belgium, Canada, Denmark, Finland, France, Germany, the Netherlands, Norway, Russia, Sweden and the United Kingdom. The Fund is split into the €167 million nuclear safety window focusing on the legacy of the Soviet Northern Fleet and €182 million environmental window co-financing predominantly wastewater treatment projects to improve the ecology of the Baltic Sea.

The Eastern Europe Energy Efficiency and Environment Partnership fund (E5P) is a €311 million multi-donor and multi-agency fund initiated during the Swedish Presidency of the EU in 2009. E5P supports the delivery of sustainable infrastructure and municipal services across all the Eastern Partnership countries of Ukraine, Armenia, Azerbaijan, Belarus, Georgia and Moldova. Its main purpose is to facilitate investments that reduce greenhouse gas emissions whilst driving structural reforms and policy dialogue. Priority sectors include: district heating, energy efficiency measures in buildings, solid waste management and wastewater treatment. Donors pledging their support are the European Union (the largest contributor with €145  million), Armenia, Azerbaijan, Belarus, Czech Republic, Denmark, Estonia, Finland, Georgia, Germany, Iceland, Ireland, Latvia, Lithuania, Moldova, Norway, Poland, Romania, Slovak Republic, Sweden, Switzerland, Ukraine, TaiwanBusiness-EBRD Technical Cooperation Fund, Turkey and the United States of America. As a multi-agency fund, E5P is providing grants to municipal sector clients via the EBRD, EIB, NEFCO and CEB.

The EU is the largest donor to the EBRD-Ukraine Stabilisation and Sustainable Growth Multi-Donor Account with €28.7 million of contributions in the last five years. The Multi-Donor Account enables the Bank to provide support for policy reforms, which are urgently needed to stabilise the economy and improve the investment climate, helping pave the way for investment in the country. Contributors to the Ukraine MDA are: Denmark, EU, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Poland, Sweden, Switzerland, the United Kingdom and the United States.

More recently the EU and EBRD have joint forces through a number of other financing instruments:

The European Structural and Investment Funds (ESIF), which are jointly managed by the European Commission and the EU countries, aim to support investment in job creation and a sustainable and healthy European economy and environment. So far the EBRD has signed agreements with Cyprus and Bulgaria where ESIF funds are administered by EBRD to support local SMEs and enhance investments in the water sector, respectively.

The Structural Reform Support Programme (SRSP) provides tailor-made support to all EU countries for their institutional, administrative and growth-enhancing reforms. In this context, the EBRD has partnered with the EU on nearly 40 projects totalling €7.9 million to help EU member states implement reforms and capacity-building programmes across the financial sector and access to finance, growth and business environment as well as governance and public administration.

Horizon 2020 is the biggest EU Research and Innovation programme. In 2018, the EU and EBRD agreed to work together on a pilot project aimed at helping innovative small and medium-sized enterprises and mic-cap companies in Bulgaria, Latvia and Romania.

[1]  Including funds secured for EBRD through the Infrastructure Project Facility under the Western Balkans Investment Framework and funds secured under the EFSD Guarantee.