EBRD Chief Economist, Erik Berglof: This new, larger financial package will focus on both financial and non-financial sectors to promote growth and structural reforms in central and south-east Europe.
A full transcript of the video is available below.
“The purpose of this €30 billion is to help recovery in our region, and we are now talking about central and south-east Europe. This is a part of the world very much affected by the global crisis. Recovery has been quite slow in many parts of the region. Here we have an opportunity to signal our continued commitment, to show that there is new money flowing into these countries. It is an opportunity to work with governments and private investors to promote growth and structural reform. The structural reform has slowed down and in some places even halted. Here is an opportunity to use the money that is being invested to drive some of these reform issues and speed up recovery.
“First of all we are talking about a larger envelope. There is more money committed now than originally, from these institutions. This is a positive thing. There is a stronger link between these resources, new money coming to the region, and structural reforms by the governments. We are going to push much harder. Speaking as a representative of the EBRD, we are going to try to use our projects both in the financial and non-financial sector to push for structural reforms much more intensively than we have done in the past.
“The problem we were facing previously was a different one. It was a liquidity problem for subsidiaries of large Western-owned banks operating in our region. There [the objective] was very much to help these banks stay committed to the region, to also fill that gap. Now the objective is different and the problem is different. We see deleveraging going on; we see some money being taken out of the region. We don’t expect this money coming back any time soon, so we are looking to manage this deleveraging process, trying to help those who are affected, be it financial institutions or non-financial institutions, companies, etc. This makes a difference.
“This is also much more in line with the EBRD spirit. The EBRD is not a liquidity provider as such. We are trying to push for reforms, we are trying to change the way the economies work and this new package does this to a much greater extent than the previous package.
“On contrasting the previous package, the joint action plan, and this recovery plan now – what is fundamentally different is the type of investments that we are providing. At the time it was all about debt, all about lending. Now it is a combination of debt and equity. It is about investments in industry and trying to make these economies more competitive and helping them to come out of this very difficult recovery phase.”