Published: May 6, 2010
Mirow outlines how emerging Europe can meet this year’s challenges.
The European Bank for Reconstruction and Development (EBRD) will respond to the lessons learnt from the financial crisis in emerging Europe, its president has said.
In a speech at the London School of Economics, Thomas Mirow announced that the bank would address the economic imbalances revealed across the region during the past 18 months.
He added that the recovery will be protracted, with overall growth below pre-crisis levels for the foreseeable future. Traditional drivers of growth, such as foreign direct investment or household consumption, will remain subdued, bringing tougher competition for scarcer sources of finance.
Mirow introduced the bank’s New Growth Agenda, which puts a greater emphasis on corporate investments and diversifying economies to address imbalances between external and domestic financing.
He said that developing local currency markets could help overcome a dependency on foreign currency debt and encourage a reliance on domestic savings. Higher corporate investments would widen the scope of countries’ product offering away from raw materials or a limited number of individual goods.
The bank will prioritise its work in the Western Balkans and the less advanced countries of the Caucasus and Central Asia. Investments in Turkey are also set to rise over the next five years.
To fund this, the EBRD plans a 50% increase in the bank’s capital to €30bn. This would release additional capital of up to €9bn a year between 2011 and 2015.
This year the EBRD is on course to invest some €8bn after investing €1.76bn in the first quarter, a rise of 60% on the same period in 2009.