News
Sustaining growth in Central and South Eastern Europe
The global financial crisis of 2008 has exposed a number of flaws in the economies of the CEI region, in particular the persistent reliance on external capital and the weakness of local capital markets. Adjustments have taken place since then, often at the cost of considerable sacrifice by the populations as austerity measures were imposed to restore economic stability. Thanks to these efforts, the fundamentals of many of your economies are in a much better shape now than they were before the crisis.
However, the region is today facing a new set of challenges. Slow growth prospects in Western Europe pose a threat to the most export-driven economies, and the fragility of a number of eurozone parent banks could potentially lead to a new credit squeeze in the region.
Against this background, the reform agenda needs to be further intensified. The EBRD, through its investments and policy dialogue, is ready to assist the countries of the region in achieving sustainable long-term growth, based on a strengthened export capacity, the development of a knowledge-based economy and innovation, and an improved business environment.
The latter is particularly important. We have been encouraged by the fact that, according to the latest World Bank Doing Business report, two of the three most improved countries in the past year are countries from the CEI region. This proves the region’s catch-up potential. However, all rankings, and our own experience, show that much remains to be done in terms of creating a more conducive environment for investment and entrepreneurship.
In this regard, we remain committed to supporting the process of EU approximation, based on our conviction that hard work in reaching and deepening EU standards moves transition forwards so that market economy and democracy are achieved. I would like to join in the words of congratulations to our hosts, who, as we have heard today from many speakers, have obtained a positive recommendation from the European Commission for a formal status of EU candidate country.
Let me also stress the quality of the existing high level of regional cooperation between your governments – a testament to which is the CEI itself. This is valuable experience which we would like to share with our countries of operations in other regions.
This brings me to the historical changes taking place in the CEI’s “southern neighbourhood” – the countries of the southern and eastern Mediterranean. As you know, responding to an appeal by G-8 leaders at the Summit in Deauville to consider investing in these countries, we submitted to our shareholders proposals regarding the modalities for such engagement. The Governors of the EBRD subsequently made a unanimous decision to expand the activities of the Bank to the countries of the eastern and southern Mediterranean region in order to foster democracy, support the transformation of economies and improve the lives of the people there.
I would like to thank your governments for their support in this process and to encourage you to finalise the necessary national internal procedures, including (where required) parliamentary ratification, in order to enable the EBRD to start supporting concrete investment projects in the new region as early as possible.
We see this as an opportunity not only for the Bank to use some of its experience in promoting transition, but also as an opportunity for the countries of central and south-eastern Europe to share their own experiences with the countries embarking on the transformation to multiparty democracy, pluralism and market economies. We not only hope for your continuing support in this process, but we also see you as our partners in transferring your experience and knowledge to the region, which is so much in need of this.
I would like to stress once more that the expansion to the south will not come at the cost of our investment in the present countries of operations. The EBRD will do its best to maintain the record level of activity achieved in 2010, when we financed more than 200 projects in the CEI countries, with a total annual business volume of more than €4.5 billion. We are well on track to meet our targets this year as well. At a time of fiscal restraints, our ability to work with the private sector and mobilise investments without placing additional burdens on public budgets is probably more important than ever. The Bank will deliver on the ambitious targets set in the wake of our capital increase.
