The FINANCIAL — Georgia, member of EBRD (European Bank for Reconstruction and Development) and 0.03 shareholder of the Bank agrees on its expansion plans to Arab nations.
Jonathan Charles, new Director of Communications at the European Bank for Reconstruction and Development (EBRD), and former presenter of BBC World News has been meeting with Georgia’s new Finance Minister Dimitri Gvindadze last week, who himself is a governor of the Bank, to discuss the issue.
EBRD is the largest investor in Georgia, committing 1.5 billion in 135 investment projects since the date of its entrance in early 2000.
As Jonathan Charles explains, EBRD has been asked by the G8 and EU to expand its lending operations to the Middle East and North Africa following a string of popular revolts in the Arab world.
He said that Georgia’s new Finance Minister clearly understood the issue and agreed with the Bank’s effort to support the countries in need.
Egypt and Morocco will be among the first to attain support from the Bank and have already expressed an interest in the help.
Lending to Egypt could start at around 100 million to 200 million EUR and will target the infrastructure, agriculture and other potential projects.
“Lending to the entire Middle East and North African region could grow to about 2.5 billion EUR by 2015; the expansion should not require shareholders to raise the Bank’s capital or undermine its other operations,” explained Jonathan Charles to The FINANCIAL.
“Our support to N. Africa is of the utmost importance, especially the agro sector which takes up about 40% of the economy, as the majority of people earn no more than 2 USD a day which is a very dramatic situation,” Charles told The FINANCIAL.
However as he reassured the Minister, EBRD’s lending to Georgia will not be interrupted but in fact increased in the coming months with 66 million EUR already invested in 21 projects running this year.
The final decision will be made in late September this year once 61 shareholder countries and 29 members of the Bank approve with unanimous vote the expansion plans of the Bank, although ratification by the countries’ parliaments will take a bit longer.
EBRD activities in the new region will begin in the spring of next year.
The EBRD’s 61 member countries and institutions raised their capital by 50 percent to 30 billion EUR (43 billion USD) this year.
“Any additional activity in North Africa and the Middle East will not reduce our ability to invest in other countries including Georgia which is a very important area of EBRD’s operations,” Charles said to The FINANCIAL.
“There are some similarities between the events of 1989 and 1991 which are the collapse of the Soviet Union and now what is happening in the Arab countries, so providing finance to the private sector is of the utmost need now,’’ said Charles.
“We are increasing our focus on Georgia and not only with money but also expertise and projects implemented this year,” he said.
As Paul Henri Forestier, EBRD Director for the Caucasus, Moldova and Belarus told The FINANCIAL, EBRD will mainly target the sectors of tourism, energy infrastructure and agriculture this year.
“The EBRD is helping to improve the quality of power supply and stimulate renewable sources of energy in the Caucasus with an 80 million EUR sovereign loan to Georgia for the construction of a new high voltage transmission line – the Black Sea High Voltage line, which will interconnect Georgia and Turkey,” said Forestier to The FINANCIAL.
“Last year (2010) EBRD invested 350 million EUR in Georgia into 21 projects. So far this year as of June 2011 we have signed 4 projects with a total amount of 67 million EUR.
Total cumulative investments since the start of EBRD’s operation in Georgia to date we have invested 1.5 billion in 135 projects and this support will continue even further regardless of the Bank’s expansion plans,” Forestier told The FINANCIAL.
Created in 1991 after the Cold War to help ex-Communist countries’ transition to market economies, the EBRD now lends about 9 billion EUR a year to projects stretching from Croatia in Central Europe to Kazakhstan’s frontier with China in the East.
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