EBRD Donor Report 2007 Making change happen · EBRD Donor Report 2007. 1 Message from the President...

Making change happenEBRD Donor Report 2007

1 MessagefromthePresident2 TheEBRD’sareaofoperations4 Highlights6 Donor-fundedactivitiesandofficialco-financing16 Earlytransitioncountries28 WesternBalkans40 Russia,Belarus,Kazakhstan,TurkmenistanandUkraine52 EUmemberstatesandCroatia60 Annex1:Donoragreementsandreplenishmentsin200661 Annex2:TCcommitmentsin2006,bydonor62 Abbreviations63 Glossaryofterms

ForfurtherinformationontheEBRD’sdonor-fundedprogrammes,pleasevisitwww.ebrd.com/oppor/tc

Contents

TheEBRD’spartnershipswithdonorsandofficialco-financingagenciesarehelpingtoraiselivingstandardsinourmembercountries.Acrosstheregionourworkisprovidingimprovementsinbasicservicessuchascleanwaterandmorereliabletransport;jobcreationisbeingsupportedthroughgrowthinprivateenterprise;andpublicagenciesareworkingwithbetterlawsandregulations.Thesebenefitsaretakingplaceacrossnumeroustowns,citiesandregions,thankslargelytothedonorandco-financingagenciesthatworkwithus.

Thegrowthoftheregionisdrivingenergydemand,butatthesametimetherearemanyinefficientpracticesthatresultinneedlessenergywaste.TheEBRDhaslaunchedtheSustainableEnergyInitiativeasanewpartnershipwithdonorstocutbackonwastefulandpollutingenergyuse.OurpartnershipincludestheG8groupofindustrialisedcountries,theEuropeanUnion,internationalfinancialinstitutionsandourcountriesofoperations.Theaimistoinvestupto€1.5billioninenergyefficiency,renewableandcleanenergyprojectsoverthreeyears.

Thereisalsorenewedinterestinharnessingtheprivatesectortoinvestinmoreenergyandinfrastructureprojects.TheBankrecognisestheneedforgreaterinstitutionalstrengtheningofpublicagenciesthatengagewithprivatefirms,includingatthemunicipallevel.Dialoguehasbegunwithdonorstosupportthetransferofskillsandknow-howtogovernmentagenciesresponsibleforpublic-privateconcessionsandothercontractingarrangements.Weseethisasanimportantstepincreatingimprovedaccesstoenergyandinfrastructure.

ThelaunchoftheWesternBalkansFundlastNovemberisaverywelcomedevelopment.Thisnewmulti-donorinitiative

enablesustocoordinateourworkmuchmoreeffectively,includingwiththeEuropeanUnionunderitspre-accessionarrangementsfortheregion.IwelcomethedecisionsoftheCzechRepublic,Poland,theSlovakRepublicandSloveniatojointheEBRD’sdonorcommunitythroughmembershipofthisfund.Welookforwardtootherdonorsjoininginthecomingyear.

TheETCFund,nowinitsthirdyear,takesonadditionalresponsibilitywiththeembraceofMongoliaundertheEarlyTransitionCountriesInitiative.Thismulti-donorfundhasplayedacriticalroleinsupportingtheBank’sworkinourpoorestcountries,andIlookforwardtothecontinuedleadershipthathasbeenprovidedbydonors.TheOECD’srecognitionoftheETCFund’seligibilityforOfficialDevelopmentAssistancehasbeenafactorinmaintainingdonorsupport,andwehopetoreceivesimilarrecognitionfortheWesternBalkansFundlaterintheyear.

Finally,asImentionedlastyear,theEBRDispleasedtobeabletomoveforwardwithdonorpartnershiparrangementsthatreflecttheprioritieswehavesigneduptointernationally.IammindfuloftheMillenniumDevelopmentGoalsastheyrelatetoareassuchasjobcreationandcleanwater.Iamalsopleasedforthesupportgivenbydonorstothe2005OECDDACParisDeclarationonAidEffectiveness.Welookforwardtocontinuingourworktogetherinthecomingyear.

JeanLemierrePresident,EuropeanBankforReconstructionandDevelopment

Message from the President

29countries

4�0millionpeople

BycoordinatingtheeffortsoftheEBRD,donoragenciesandco-financingpartners,weareabletomakearealdifferencetothelivesofthepeoplelivingacrosstheBank’sareaofoperations.

Earlytransitioncountries1 Armenia2 Azerbaijan3 Georgia4 KyrgyzRepublic5 Moldova6 Mongolia7 Tajikistan8 Uzbekistan

WesternBalkans9 Albania10 BosniaandHerzegovina11 FYRMacedonia12 Montenegro13 Serbia

EUmemberstatesandCroatia19 Bulgaria20 Croatia21 CzechRepublic22 Estonia23 Hungary24 Latvia25 Lithuania26 Poland27 Romania28 SlovakRepublic29 Slovenia

Russia,Belarus,Kazakhstan,TurkmenistanandUkraine14 Russia15 Belarus16 Kazakhstan17 Turkmenistan18 Ukraine

Chapter1Donor-fundedactivitiesandofficialco-financing

Chapter2Earlytransitioncountries

Highlights

€113mwasprovidedbydonorsin2006,primarilyassistingtheregionsfacingthegreatesttransitionchallenges.

70%oftechnicalcooperationprojectsundertakenintheEBRD’spoorestcountrieswerefundedthroughthemulti-donorEarlyTransitionCountriesFund.

Chapter3WesternBalkans

Chapter5EUmemberstatesandCroatia

Chapter4Russia,Belarus,Kazakhstan,TurkmenistanandUkraine

Morethan€167millionwasprovidedbypublicsectoragenciestoco-financekeyinfrastructureprojectsintheWesternBalkans.

63,200loanswereextendedtosmallbusinessesundertheEU/EBRDSMEFinanceFacility,whichsupportsenterprisesinthenewEUmemberstatesandcandidatecountries.

95%ofdonor-fundedprojectsundertakeninRussiawerelocatedoutsideofMoscowandStPetersburg.

y Grantfundingtotalling€290millionwasmobilisedfromdonorsin2006.TheEuropeanUnionwasthemaingrantprovider.

y NewcountriestojointheEBRDdonorcommunityin2006weretheCzechRepublic,theRepublicofKorea,Poland,theSlovakRepublicandSlovenia.

y TCassignmentsfundedbydonorsconcentratedontheEBRD’sleastadvancedregions–theearlytransitioncountries(ETCs)andtheWesternBalkans.

�Donor-funded activities and official co-financing

Technicalcooperation(TC)andofficialco-financingareintegralpartsofEBRDinvestments.GrantsprovidedbydonorgovernmentshelptopreparethewayforEBRDprojectsandallowclientstobenefitfromexpertadvice.Prioritysectorsincludemicroandsmallbusinesses,infrastructureandinstitutionalreform.

y Investmentco-financingof€1.45billionwasprovidedtoEBRDprojectsthroughofficialpartnersandagencies.TheEuropeanInvestmentBankwasthelargestinvestmentco-financingpartner.

y Newmulti-donorinitiatives–theSustainableEnergyInitiativeandtheWesternBalkansFund–werelaunchedin2006.

y Majornewbilateralinitiativeswereestablished.TheseincludedfundingfromCanadatosupportprivatesectordevelopment,governanceandenvironmentprojectsinGeorgia,Armenia,UkraineandRussia,andassistancefromItalyfortheWesternBalkansLocalEnterpriseFacility.

y TheEuropeanUnionprovidedfundstoUkraineandMoldovatoimproveenergyefficiency,JapansupportedmunicipalprojectsinSiberiaandFarEastRussia,SwedencontributedtotheETCMunicipalProgramme,andSwitzerlandprovidedfundingfordistrictheatinginRomania.

“TheUKgovernmentsupportstheEarlyTransitionCountriesandWesternBalkansfunds.Thesefundsillustratetheeffectivenessofpooleddonorassistanceandembodytheprinciplesunderlyingthe2005OECDParisDeclarationonAidEffectiveness.”

SimonRay BoardDirectorforthe

UnitedKingdom,EBRD

� Donor-funded activities and official co-financing

In2006theEBRDmobilised

€290m ingrantfunding

€201mforinvestmentco-financingand

€89m forTCandrelatedpurposes

In2006theEBRDsignedgrantagreementsforalmost

€113m innewdonorfunding,mainlyforTC

Morethan30governmentministriesandagenciesprovidesupportthroughtheEBRD’sTechnicalCooperationFundsProgramme(TCFP).Muchofthisassistanceisusedtosupportsmallbusinesslending,tradefinance,advisoryservicesandlegalreform.Fundingarrangementsvaryfromagreementswithsingledonorsforspecificprojectstoprogramme-widearrangementsinvolvingmultiplecontributors.During2006agreaterproportionofdonorfundingwasallocatedtomultilateral“untied”funds(meaningthemoneycanbeusedwithoutanyrestrictionastothenationalityofthefirmorexpertscontractedinaparticularproject).Thesefundsproveveryefficientinsupportinglarger-scaleprojectsinvolvingmorethanonecountrywhileeffectivelyintegratingtechnicalcooperation(TC)fundingintoEBRDoperations.

Thekeyprogrammesreceivingassistanceinclude:

ymicroandsmallenterpriselendingprogrammes,whichpromoteeasieraccesstofinanceforsmallbusinessesinnearlyalloftheBank’scountriesofoperations

yinfrastructuresupporttodevelopmunicipalservices,suchaswatertreatmentplants,andregulatory

structuresthatencouragedecentralisationandcommercialisation

ytheDirectInvestmentFacilityandtheDirectLendingFacility,whichprovideequityandloansforlargerbusinesses

ytheTradeFacilitationProgramme,whichhelpstofinancebusinessesengagedinexportandimporttrade

ytheTurnAroundManagementprogrammeandtheBusinessAdvisoryServicesprogramme,whichprovidetechnicalandmanagementadvicetolocalbusinesses

ytheLegalTransitionProgramme,whichhelpsgovernmentstodevelopthelawsandregulationsneededtofosterbusinessgrowth.

Donor funding and beneficiaries in 2006

TheEBRDundertookawiderangeofinitiativesinpartnershipwithdonorsandofficialco-financingagenciesin2006.TCfinancinglastyearaimedtoexpandbusinessinvestment,createemploymentopportunities,encouragelocalbankfundingformicro,smallandmedium-sizedenterprises(MSMEs)andincreaselocaltradefinance.Businessesintheinfrastructureandenergysectorshavebenefitedfromadviceonprojectinvestment,whilegovernment

regulators,policymakersandlegalofficialshavebeenabletogainfromadviceonadministrativereforms.Throughdonorfinancing,theBankhascontinuedtoextendthebenefitsofthetransitionprocesstoanincreasingnumberofpeopleinallcountriesofoperations.

In2006theEBRDsignedgrantagreementsforalmost€113millioninnewdonorfunding,mainlyforTC.Asinpreviousyears,thelargestcontributionwasprovidedbytheEuropeanUnion(€36million).AlargevolumeofTCgrantfunding(€26million)wasalsomobilisedthroughmulti-donorarrangements.DetailsofgrantfundingmobilisedthroughagreementswithdonorsareshowninAnnex1.Additionalgrantsof€177millionwerealsomobilisedfromtheEuropeanUnionforspecificinvestmentprojects.

NewTCspendingcommitmentsin2006amountedto€74million.Muchofthis–€37.2million(50percent)–wastargetedattheWesternBalkansandtheearlytransitioncountries(ETCs).SeeChapters2and3forfurtherdetails.

AssistancetothenewEUmemberstatesofcentralEuropeandCroatiaamountedto€13million,mainlyprovidingfinancetoMSMEs.

NewTCspendingcommitmentsin2006amountedto

€74m €37.2m wastargetedattheWesternBalkansandtheETCs

InRussia,€9.6millionsupportedthedevelopmentofsmallbusinessandthestrengtheningofinfrastructureandenvironmentalprojects.InBelarus,Kazakhstan,TurkmenistanandUkraine,€10.6millionwasdedicatedtoexpandingprivateenterpriseandcreatingenvironmentallysoundinfrastructure,inparticularintheenergysector.SeeChapters4and5formoredetailsofTCassistanceprovidedtoprojectsinthesecountries.Inaddition,€3.1millionwasprovidedforprojectactivitiescoveringmorethanonecountry(regionalassignments).TheuseofdonorfundingreflectedtheEBRD’sprioritiesinrespondingtotheever-changingregionalandglobalbusinessenvironment.Forexample,bysettinguptheSustainableEnergyInitiativeandtheWesternBalkansFund,theEBRDconfirmeditscommitmenttotacklingclimatechangeandtosupportingthelong-termEUaspirationsofsouth-easternEurope.Partnershipswithofficialco-financingagencieswerestrengthenedduringtheyear.ThisincludednewworkingarrangementswiththeEuropeanInvestmentBank(EIB)andparticipationintheEU-IFIcooperationinitiative.

�0 Donor-funded activities and official co-financing

CasestudySupportingenergyefficiency,renewableenergyandcleantechnologies

TheEBRD’sregionofoperationsisoneofthefastest-growingpartsoftheworld,anditsenergyneedsareincreasing.However,itusesuptoseventimesmoreenergyperunitofgrossdomesticproductthanwesternEurope.IftheregionwereasefficientaswesternEurope,globalenergyconsumptionwouldfallby7.2percent.

Thiswastefulandpollutinguseofenergyisadamagingenvironmentallegacyofformercentrallyplannedeconomies.Inresponse,theEBRDhasestablishedtheSustainableEnergyInitiative(SEI).TheinitiativereflectsthepriorityoftheG8,theEuropeanUnionandmanyEBRDcountriesofoperationstoaddresstheissueofenergywasteandsecurity,climatechangeandtheneedforcleanerfuelsources.

UndertheSEI,theEBRDwillinvestupto€1.5billioninenergyefficiencyandrenewableandcleanenergyprojectsoverthreeyears.Togetherwithpartnerco-financing,totalinvestmentcouldreachupto€5billion.Theinitiativeaimstomobiliseafurther€100millionfromdonorgovernmentstoraiseawarenessofthepositivereturnsoninvestmentfromenergyefficiencymeasuresandtohelptheBankmakethebusinesscaseforcleanerenergytechnologies.Almost€50millionhasalreadybeenpledged.

TheSEIfocusesspecificallyonenergyefficiencyandthereductionofcarbonintensityby:

y acceleratingthepaceofinvestmentinenergyefficiencybylargeindustrialusersintheEBRD’scountriesofoperationstohelpreducecarbonemissions

y expandingenergyefficiencycreditlinestolocalbanksforon-lendingtosmallandmedium-sizedenterprisesforsmallenergyefficiencyandrenewableenergyprojects

y supportingthedevelopmentofcleanerenergysuppliesinpowerandnaturalresourceprojects

y supportingthedevelopmentandfinancingofrenewableenergyprojects

y investinginprojectstoincreasetheirefficiencyandtoreducethecarbonemissionsofdistrictheatingandurbantransport

y supportingthedevelopmentofcarbontradingintheBank’scountriesofoperations.

TheEBRDalreadyhasaproventrackrecordinsupportingenergyefficiencyandprotectionoftheenvironment.From2001to2005itinvestedalmost€680millioninprojectswithenergyefficiencycomponents,whileafurther€406millionwasinvestedoverthesameperiodinpowerprojects,resultinginreducedcarbonemissions.

IftheregionwereasefficientaswesternEurope,globalenergyconsumptionwouldfallby

From2001to2005theEBRDinvestedalmost

€680minprojectswithenergyefficiencycomponents

��

TheEU-IFIinitiativerespondstotheEuropeanUnion’sneedtointensifyitscooperationwithinternationalfinancialinstitutions,particularlyinsupportingpre-accessionprogrammesintheWesternBalkans.TheETCandWesternBalkanfundsprovidesupporttotheOECDDevelopmentAssistanceCommittee(DAC)principlesonassistancetopoorcountries.DACisthemainbodythroughwhichtheOECDdealswithissuesrelatedtocooperationwithdevelopingcountries.

Throughtheseinitiatives,theBankhasadvanceditsoperations,actedasacatalystforfurtherinvestmentandpromotedfundamentalsustainabledevelopmentinthemorechallengingenvironmentsofitssouthernandeasterncountriesofoperations.

Emerging priorities

Byfocusingontheareasthataremostinneedoffinance,theEBRDisabletomakemaximumuseofdonorfunding.

Sustainable Energy Initiative TheSustainableEnergyInitiative(SEI)isanewEBRD-donorpartnershipthatwaslaunchedinMay2006toimproveenergyefficiencyintheBank’scountries

Chart 1.1Donor spending by region, 2006 (€ million)

Russia

Notes1 TheEUmemberstatesareBulgaria,theCzechRepublic,Estonia,Hungary,

Latvia,Lithuania,Poland,Romania,theSlovakRepublicandSlovenia.CroatiaisanEUcandidatecountry.

2 Formostof2006theETCscomprisedArmenia,Azerbaijan,Georgia,theKyrgyzRepublic,Moldova,TajikistanandUzbekistan.MongoliajoinedtheminOctober2006.

3 TheWesternBalkansconsistsofAlbania,BosniaandHerzegovina,FYRMacedonia,MontenegroandSerbia(includingKosovo).

4 Regionalfundingsupportsassignmentsthatspanvariouscountries.

Belarus,Kazakhstan,TurkmenistanandUkraine

EUmemberstatesandCroatia 1

ETCs 2 WesternBalkans 3

Regional 4

ofoperationswiththehelpofdonorfunding.InitialdonorpledgeshavebeenreceivedfromAustria,Canada,theEuropeanUnion,France,Italy,Luxembourg,theNetherlands,Spain,SwedenandtheUnitedKingdom.Discussionsarealsotakingplacewithotherpotentialdonors.ThesupplyofcarboncreditsacrosscountriesfromcentralEuropetoCentralAsiawillbeincreasedsignificantlyunderthetwocarboncreditfunds:theEBRD-EIBMultilateralCarbonCreditFund,whichbeganin2006withacommitmentof€165millionfromsixcountriesandsixcompanies;andthe€32millionNetherlands-EBRDCarbonFundcreatedin2003(oneofEurope’sfirstcarbontradingfunds).Thefundspurchasegreenhousegasemissionreductions,knownascarboncredits,forparticipantsofaprojectandprovidefundingforgreeninvestmentschemes.ThisisdoneusingtheJointImplementationCleanDevelopmentMechanismsoftheKyotoProtocol(seecasestudyonpage26).

ETC FundTheEarlyTransitionCountries(ETC)Fund,launchedin2004,isanuntiedmulti-donorfundthatismanagedthroughanAssemblyofContributors.Bytheendof

2006,donorpledgestotheETCFundamountedto€40.5million,withanadditional€5millionfromtheNetherlandsforco-financingofEBRDprojects.Nearly€22millionfor108TCprojectshadbeencommittedbytheendoftheyear(seeChapter2).

Amajordevelopmentin2006wastheinclusionofMongoliaastheeighthETCFundbeneficiarycountry.TheothersevenareArmenia,Azerbaijan,Georgia,KyrgyzRepublic,Moldova,TajikistanandUzbekistan.

Western Balkans FundTheWesternBalkansFundwassetupin2006tomobiliseadditionalgrantfundingforAlbania,BosniaandHerzegovina,theFormerYugoslavRepublicofMacedonia,MontenegroandSerbia(includingKosovo),andtostrengthenthecoordinationofEBRD-donorassistance.

TheFundwasinauguratedwithinitialpledgesamountingto€13.7million.AustriawaselectedChairandFinlandVice-Chairattheinauguralmeeting.Aprioritywillbethecoordinationofitsactivitieswiththoseofothermajordonorsintheregion,includingItaly,theEuropeanUnionandtheUnitedStates(seeChapter3).

Romanian textile (detail)

“SloveniaisconvincedthattheprojectssupportedbytheWesternBalkansFundwillenhancetheregion’seconomicandsocialdevelopment,creatingsustainableemploymentandimprovingpeople’slives.SloveniaishappytojointheEBRDdonorcommunityandshareitsownsuccessfultransitionexperience.”

AndrejKavcic MinistryofFinance,Slovenia

andCentralAsia.During2006itcontinuedtopromoteprojectsinenvironmentalinfrastructure,energyefficiency,renewableenergy,emissionstradingandbiodiversity.

TheEuropeanUnion,Finland,Italy,Luxembourg,theNetherlandsandSwedenprovidedongoingfundingforPPCstaffworkinginEBRDbankingteams,andtheUnitedKingdomcontinueditssupportforthePPCSecretariat.AdditionalcontributionsweremadebyFinlandandSweden.

In2006,PPCenvironmentalinfrastructureinvestmentsreceivedover€21millionindonorco-financingfromtheEuropeanUnion,SwedenandtheUnitedStates.TheETCFund,GermanyandtheUnitedKingdomfundedPPCprojectfinancingworkshopsinArmenia,Georgia,FYRMacedonia,RussiaandUkraine.

Official co-financing

Co-financingofEBRDinvestmentprojectsbyofficialagenciesandpublicsectorinstitutionsin2006amountedto€1.45billion(considerablyhigherthanthe€770millionrecordedthepreviousyear).Around70percentofthisfigurewasfor

Northern Dimension Environmental PartnershipAttheendof2006,fundscontributedtotheNorthernDimensionEnvironmentalPartnership(NDEP)totalled€241million,withnearly€150milliondesignatedfortheupgradingofnuclearenergyfacilitiesinnorth-westernRussia.Fornon-nuclearactivities,theFundhascommitted€56millionandrequestsforanother€45millionhavebeenpresented.Thenon-nuclearcontributorsincludeDenmark,theEuropeanUnion,Finland,Germany,Norway,RussiaandSweden.TheprincipalaimofNDEPgrantsfornon-nuclearpurposesistoactasacatalystforfurtherinvestmentsinenvironmentalprojects.

TheNDEPwasdevelopedin2001inresponsetocallsfromRussiaandtheinternationalcommunityforaconcertedefforttoaddressenvironmentalproblemsinnorth-westernRussia(seeChapter4).

Project Preparation Committee TheProjectPreparationCommittee(PPC)isanetworkofdonors,internationalfinancialinstitutionsandpartnercountriesinvestinginEBRDenvironmentalprojectsineasternandsouth-easternEurope,theCaucasus

Attheendof2006,fundscontributedtotheNorthernDimensionEnvironmentalPartnershiptotalled

€241m

��

developingmunicipalandenvironmentalinfrastructureprojectsinthenewEUmemberstatesandCroatia.

Asinrecentyears,theBank’slargestofficialco-financingpartnerwastheEIB,withacontributionof€822million.Overall,sixprojectshavebeendirectlyco-financedbytheEIBandtheEBRD.Otherimportantloanco-financinghasbeenmadebytheNordicInvestmentBank(€187.9million).Energy,municipalinfrastructureandtransportsectorprojectsaccountedfor80percentoftheco-financingprovidedbyofficialagencies.

Investmentfundingprovidedby20officialco-financiersin2006wasmainlyintheformofloans(€1.1billion).Officialco-financiersalsoprovidedriskparticipations(€82million)andgrants(€192million).Canadaalsoprovidedexportcreditagencyfundingof€38.0million.Investmentgrantsarebecomingincreasinglyimportantinprojectimplementation.TheEuropeanUnionisthelargestproviderofinvestmentgrantstoEBRDprojects,supportinginvestmentsinArmenia,Bulgaria,Croatia,GeorgiaandRomania.In2006anumberofotheragenciesalso

Co-financingofEBRDinvestmentprojectsbyofficialagenciesandpublicsectorinstitutionsin2006amountedto

€1.45bn

“WebelievetheEBRDhasalwaysledonissuesofenergyefficiencyandwelikethewaymultilateraldevelopmentbanksworktogethertoachieveanefficientinvestmentframeworkoncleanerenergy.InsupportingtheSustainableEnergyInitiative,Franceispleasedtoprovidefundsthroughthemobilisationofitsfinancialinstruments.”

VincentPerrin MinistryofEconomy,

FinanceandIndustry,France

providedgrantstoBankprojects.Theseincludedgrantco-financingfrom:

yTheSwedishInternationalDevelopmentCooperationAgencyfortwowaterprojectsinGeorgia(inKutaisiandPoti)

yTheSwissStateSecretariatforEconomicAffairsforthedistrictheatingsysteminIasiinRomania

yItaly,throughtheLocalEnterpriseFacilityfortheWesternBalkans,foracompanyproducingbuildingmaterialsandabankinKosovo

yTheUSMillenniumChallengeCorporation(MCC)andtheEBRD,whichagreedapipelineofsupporttofinancemunicipalinfrastructure,energyandroadsectorprojectsinGeorgia.InSeptembertheMCCandtheBanksignedthefirstco-financingagreementforgrantsupporttoawaterproject

yTheNetherlands,whichcontributedinvestmentgrantsof€5millionfortwoprojectsinMongolia.ThiscontributionwasmadethroughtheETCFund.

“InGeorgia,co-financingmunicipalinfrastructureprojectswithorganisationssuchastheEBRDisessentialforthesuccessofourprogramme,whichfocusesongrowthandpovertyreduction.”

StephenGroff USMillenniumChallengeCorporation,

UnitedStates

Chart 1.2EBRD investments in 2006, by number of projects

Notes1 TheWesternBalkansconsistsofAlbania,BosniaandHerzegovina,

FYRMacedonia,MontenegroandSerbia(includingKosovo).2Formostof2006theETCscomprisedArmenia,Azerbaijan,Georgia,

theKyrgyzRepublic,Moldova,TajikistanandUzbekistan.MongoliajoinedtheminOctober2006.

3 TheEUmemberstatesareBulgaria,theCzechRepublic,Estonia,Hungary,Latvia,Lithuania,Poland,Romania,theSlovakRepublicandSlovenia.CroatiaisanEUcandidatecountry.

WesternBalkans 1

Earlytransitioncountries 2

Russia,Belarus,Kazakhstan,TurkmenistanandUkraine

EUmemberstatesandCroatia 3

Numberofinvestments

NumberofinvestmentssupportedbyTC

Investment impact

Akeyobjectiveofdonor-fundedTCistoleveragecapitalinvestmentthroughEBRDprojects.From1991to2006,theEBRD’sTCcommitmentsthatdirectlysupportedinvestmentstotalled€761million.Thesefundshavehelpedleverageinvestmentsof€38.3billion,withaleveragingeffectof52:1(inotherwords,€1ofTCledto€52ofinvestment).

OfalltheinvestmentprojectssignedbytheEBRDin2006,53percentweresupportedbyTC.ThelargestnumberofTC-supportedprojectswasintheETCs,indicatingthecontinuingneedfortechnicalcooperationinthisregion(seeChart1.2).

Donor visibility

TheEBRDpromotesawarenessandrecognitionoftheroleplayedbydonorsinitsoperationsthroughvariousmeans:theBank’swebsite,donorpublications,videosandposters.Theaimofthisworkistoinformtargetaudiencesindonorandbeneficiarycountries.Decisionmakersintheinternationalcommunityarealsomadeawareoftherolethatdonorsareplaying.

Anumberofnewdonorvisibilityinitiativesarebeingundertaken,asdetailedbelow.

yTheseriesofbookletsonEBRD-donorcooperationhasbeenexpanded.AnewpublicationonLuxembourg’sinvolvementintheEBRDregionwaspublishedinearly2007.Atotalof11bookletsintheserieshavenowbeenproduced.

yEBRDcountrywebpageshavebeenupdatedtoincludecasestudies,slideshowsandprojectsimplementedunderpartnershiparrangementswithdonorsandofficialco-financiers(seewww.ebrd.com/country).TwonewwebpageswerecreatedforItalyandJapanasdonorcountries.

yIn2006,30articlesondonor-fundedprojectsintheEBRD’scountriesofoperationswerepostedontheBank’swebsite(seewww.ebrd.com/new/stories/2006/index).SelectedstorieswereincludedinanEBRDpublicationentitled“VoicesofChange2006–Thepeoplebehindourprojects”.

yAtotalof73pressreleasesfeaturingdonor-supportedprojectswerereleased(seewww.ebrd.com/new/pressrel/2006/index).

“Forenlargementandpre-accessionpolicytobesuccessful,assistancethroughtheEUbudgetisnotenough.TheEUishappytoworkalongsidetheEBRDindevelopingtheinfrastructureoftheWesternBalkansandinfindingwaystoachieveabetterleveragebetweenEUfundingandEBRDlending.”

DirkMeganck Directorate-GeneralforEnlargement,

EuropeanCommission

��

From1991to2006,theEBRD’sTCcommitmentstotalled

€761m

yTheBankreleasedaweb-basedslideshowin2006called“Livesandlivelihoods:Buildingprosperitywithdonorsupport”(www.ebrd.com/oppor/tc/video).Launchedatthe2006AnnualDonorMeetinginLondon,itfeaturessmallbusinessbeneficiariesrangingfromsouth-easternEuropetoRussiaandCentralAsia.TwonewvideosontheEBRDanditsdonorsinRussiaandtheETCswillbereleasedattheBank’s2007AnnualDonorMeetinginKazan.

yAslideshowonMongolia,theBank’snewestcountryofoperations,markingtheachievementsoftheMongoliaCooperationFund(MCF)andintroducingnewinvestmentopportunitiestodonors,waspresentedtotheMCFmeetingin2006.

yProductionanddistributionofdonor-focusedmaterialincreasedin2006,andwasdistributedtodonors,externalpartnersandthemediaintheBank’scountriesofoperations.ThematerialwasalsousedbytheBank’sResidentOfficestohighlightdonorsatthelocallevel.

“TheNetherlandswelcomesMongoliatotheETCInitiative.WearepleasedtheETCFundhasbecomethemainvehiclefortechnicalcooperationintheregion,andthatithasexpandedtoprovideinvestmentgrantco-financingforEBRDprojects.”

CasparVeldkamp MinistryofForeignAffairs,

theNetherlands

Architectural detail, Belgrade

InvestmentclimateAnincreaseindomesticspendinghasgeneratedhigheconomicgrowthacrosstheearlytransitioncountries(ETCs)–Armenia,Azerbaijan,Georgia,theKyrgyzRepublic,Moldova,Mongolia,TajikistanandUzbekistan.However,alleviatingpovertyandcorrectingregionaldisparitiesremainkeyobjectives.TransitionchallengesThemainchallengesareto:

y improveinstitutions,labourskillsandoverallinfrastructure,especiallyinCentralAsia,whichwillhelptoextendthebenefitsofmarketreformstothepoorestcommunities

y undertakefurtherreformsinthebankingsectortoachievebetterprivatesectoraccesstofinancesupportedbyreliablelegalandregulatoryframeworks,whichwillattractgreaterforeigninvestmentandfostercompetition.

2Early transitioncountries

SinceNovember2004theEarlyTransitionCountriesInitiativehasbeencoordinatingdonorandEBRDassistanceinthepoorestcountrieswheretheBankoperates.Itsaimistoalleviatepovertybyfinancingmostlysmall-scaleprojectsintheprivatesectorandbydevelopingmunicipalinfrastructureandthelegalenvironment.

��

y Bytheendof2006,atotalof€40.5millionfortechnicalcooperationand€5millionforinvestmentgrantco-financinghadbeenpledgedtotheETCFund.

y Nearly€22millionwascommittedtoprojectsin2006,upfrom€18.2millionin2005.

y MongoliabecametheeighthbeneficiarycountryoftheETCInitiativein2006.

y Morethan500,000loanshavebeenprovidedtosmallbusinesses.

02 04 05 06

Sector/Industry Armenia Azerbaijan Georgia KyrgyzRep Moldova Mongolia Tajikistan Uzbekistan Regional Total

Smallbusinessfinance 1,116 550 340 1,696 1,300 1,000 421 118 431 6,972

TAM/BAS 203 261 116 335 838 86 122 140 1,430 3,532

Financialinstitutions 500 445 495 – 195 235 – – 1,061 2,931

Municipalandenvironmentalinfrastructure – – 2,243 – – – 435 – – 2,678

DIF/DLF/MCFF – – – – – – – – 1,944 1,944

Energy 50 800 306 – – – – – – 1,156

Legaltransition – – – 611 293 – – – – 904

Transport – – 373 – – 350 50 – – 773

Naturalresources – – – – – 114 – – – 114

Environment 23 – – – – – – – 50 73

Telecommunications – – – – – 50 – – – 50

Others – – – – – 5 35 – 802 842

Total 1,893 2,056 3,874 2,642 2,626 1,840 1,062 258 5,718 21,969

Pledgesmorethantripledfrom

€14.7min2004toreach

€45.5m bytheendof2006

Chart 2.2Number of projects, 2002–06

Table 2.1TC commitments in 2006 by country (€’000)

�� Early transition countries

Chart 2.1TC commitments in the ETCs, 2002–06 (€ million)

Bilateral ETCFund MCF

0302 04 05 06

“GenderequalityisanimportantissueacrosstheBank’scountriesofoperations.AsChairoftheETCFund,theNetherlandsfullysupportsprojectsthathelpwomentoplayalargerroleinbusinessintheETCregion.”

JoanvanRijswijk MinistryofForeignAffairs,

TheNetherlands

Donor funding in 2006

Sinceitsestablishment,theETCInitiativehasbeenhelpingtheEBRD’spoorestcountriesofoperations.ThisgrouphasincludedMongoliasinceOctober2006,whenitbecameanEBRDcountryofoperations.

ContributingcountriestotheFundareCanada,Finland,Ireland,Japan,Luxembourg,theNetherlands,Norway,Spain,Sweden,Switzerland,TaipeiChinaandtheUnitedKingdom.Pledgesmorethantripledfrom€14.7millionin2004toreach€45.5millionbytheendof2006.

Thefirsttechnicalcooperation(TC)projectinMongoliafundedthroughtheETCFundwasapprovedinNovember2006.Uptothattime,Mongoliahadreceivedassistancefromthemulti-donorMongoliaCooperationFund(MCF),towhichJapan,Luxembourg,theNetherlandsandTaipeiChinahadcontributedatotalof€10.3million.TheMCFwillsupportnewprojectsuntilJune2007.

JapanactedasChairoftheETCFund’sAssemblyofContributorsduring2006andwassucceededbytheNetherlands(withSpainasViceChair)for2007.

TCcommitmentstotheETCsin2006(includingMongolia)totalled€22million(seeChart2.1),exceedingthelevelof2005,whichhadbeenarecordyearbyvolume,andshowinga60percentincreasesince2004.

Therehasbeenasteadyincreaseinthenumberofassignmentssince2002,withjustover100recordedin2006.TheETCFundhasbeenthelargestTCcontributor,accountingfor70percentoftotalcommitments.Georgiawasthemainbeneficiaryin2006,receivingnearly€3.9million(seeTable2.1).MajorbilateraldonorsincludedtheEuropeanUnion,Japan,SwitzerlandandtheUnitedStates.

Support programmes and facilities

SmallbusinessdevelopmentcontinuestobethemaininstrumenttopromotingtheprivatesectorintheETCs,alleviatingpovertyandraisinglivingstandards.TheEBRDandbilateraldonorsencouragesmallbusinessesthroughmicrolendingandtheTurnAroundManagement(TAM)andBusinessAdvisoryServices(BAS)programmes.TheBankalsohelpsmedium-sizedlocalbusinessesthroughthedonor-supportedDirectInvestmentFacility(DIF),DirectLendingFacility(DLF)andMedium-sizedCo-FinancingFacility(MCFF).

TheETCFundwasthelargestdonorsupportingmicrolendingin2006,focusingpredominantlyonMoldovaandMongolia.ThelargestbilateraldonorwastheUnitedStates,helpingArmeniaandtheKyrgyzRepublicinparticular.

ThelargestdonorstotheTAMandBASprogrammesacrossalleightcountriesintheETCregionwereCanada,theETCFundandJapan.

Micro and small enterprise lendingTheEBRD’smicroandsmallenterprise(MSE)projectsintheETCshaveprovidedmuch-neededaccesstofinanceandstimulatedlocaleconomicgrowth.TheBankmakesequityinvestmentsandprovidesloanstofinancialinstitutions,whichon-lendtosmallbusinesses.IntheETCs,suchloanstypicallyaverage€2,300butmaybeaslowas€300.TheselevelsoffinancearegenerallylowerthaninothercountrieswheretheEBRDoperates.

TheEBRDworkswithanumberofmicrofinanceproviders,includingnewandestablishedbanksandspecialisedfinancialinstitutions.Bytheendof2006,theBankhadworkedwith100banksandothertypesofmicrofinanceinstitution,dispensingatotalof€816.2millioninequityanddedicatedMSEcreditlines.

TheBank’sinvestmentsintheMSEsectorareaccompaniedbytechnicalassistancetostrengthenpartnerinstitutionsandtoestablishefficientcreditmethodologiestolendtotheirsmallestclients.

TheEBRD’sMSEactivitiesintheETCscontinuedtogrowthroughout2006,attracting13newpartnerbanks,ofwhichsevenarenon-bankinstitutions,whichbetweenthemdisbursedatotalof€1.3billionin597,946sub-loanstosomeofthesmallestentrepreneursintheregion.

TheEBRDhasdevelopeditsmarketsupportforMSEprojectsineachETC,focusingonagriculturalandrurallendingintheKyrgyzRepublicandTajikistaninpartnershipwiththeUnitedNationsFoodandAgricultureOrganisation.

During2006theBankintroducednewMSEprogrammesinArmeniaandMoldova,whilecontinuingtodevelopnewpartnerbankrelationshipsinmoreestablishedprogrammes.InGeorgia,twoofthelargestpartnerbanks“graduated”fromtheMSEprogramme,meaningthattheynolongerrequiredonorfundingtocontinuetheirsupportforsmallbusinesses.SeveralbanksintheKyrgyzRepublicalsograduatedfromtechnicalassistance.GraduationistheBank’sgoalforallMSElendingprogrammesasthissignifiestheabilityofeachpartnerbanktolendindependently.Partnerbankswillcontinuetoreceivetargetedandtailoredassistanceasrequired,particularlyrelatedtoagriculturallending.

Non-bankmicrofinanceinstitutionsarealsoimportantconduitstofinancethesmallestbusinesses,ofteninruralareasthatarenotservedbycommercialbanks.TheBankisnowworkingwithsevenacrosstheETCs.

Aninnovationin2006wastheintroductionofcreditscoringforMSElending.Creditscoringistypicallyusedforstandardised,smallloanswherebyscoresareassignedtothemostimportantcriteria,thereforeautomatingthedecisionprocess.Thisisintendedtoreducetransactioncostsandtoencouragepartnerorganisationstoexpandtheiroperationsfurther.TheBankconductedfeasibilitystudiesinArmenia,GeorgiaandtheKyrgyzRepublicand,during2007,planstoimplementcreditscoringinmanyotherpartnerinstitutions.ThenewtechnologyisbeingsuccessfullyusedinoneoftheEBRD’spartnerbanksinMoldova.

Lending results BytheendofDecember2006theEBRD’ssmallbusinessfinanceprojectsintheETCshaddisbursednearly600,000sub-loanstotallingover€1.3billion,withanaverageloansizeofunder€2,200.Portfolioqualityishighwitharrearsover30daysstandingatonly1.2percent.Resultsdiffermarkedlybetweencountriesduetothelevelofmaturityofeachprojectandthevariableeconomicsituation.

AcrosstheETCs,45,480loanstotalling€85.6millionweredisbursedinDecember2006alone.

Microfinanceinstitutionsoutsidethebankingsectorarecontributinganever-growingshareoftheBank’sMSElending.During2006,sixofthemdisbursed188,320loanstoMSEsfor€171.2million,withanaverageloansizeofjust€1,000.

Capacity buildingMorethan400localbrancheshavebeencreatedin39banksandmicrofinanceinstitutionsemployingover2,000loanofficerstrainedbyEBRDconsultants.Previously,bankstafftypicallylackedlendingskillsandclientfocus,reflectingpoorproceduresandloanproducts.Trainingofinternal

20 Early transition countries

“TheuniquethingabouttheETCInitiativeisthatthemulti-donorfundhasbeendevelopedbydonorcountriesthemselves.Thishascreatedasharedsenseofpurposethatmakesiteasiertoreachdecisionsondeliveringassistancetopoorcountries.”

GonzaloRamos BoardDirectorforSpain

andMexico,EBRD

CasestudyInMongolia:whereagerguaranteesaloan

InOctober2006MongoliabecametheEBRD’snewestcountryofoperations,anoccasionmarkedbya€3.8millionloansignedwithXacBank,asuccessfulMongolianbank.TheinvestmentinXacBankwasaccompaniedbytechnicalassistancefromtheETCFundfor€1millionundertheMongolianMulti-BankFramework.ThisfacilityencouragestheEBRD’spartnerinstitutionstodevelopcreditandmanagementskills,createsupportiveinstitutionalstructuresforMSE(microandsmallenterprises)andSME(smallandmedium-sizedenterprise)lending,anddiversifyintonewfinancialproducts,suchasleasing,mortgageandtradefinance.

Withnearlythree-quartersofitsclientslivingingers,thetraditionalnomadichomesmadeofblankets,XacBankhasstartedacceptingtheseassetsaspledgesforloansthatitmakesformicrobusinessventures.

MrsElbegzayaSersenjav’sexperienceisanexampleofhowXacBank’sunconventionallendingishelpingtobuildtheMongolianeconomy.Havingmovedwithherdaughter

toUlaanbaatar,Mongolia’scapital,afterbeingwidowed,shedecidedthattheonlywaytomakeaproperlivingandfundauniversityeducationforherdaughterwastostartasmallbusiness.In2003shecontactedXacBank.Hergerandhomeapplianceswerepledgedagainsta€150loansothatshecouldlaunchherventuresellingscarvesandglovesinthecity’sopenairmarket.Twofurtherloans,eachfortwicethepreviousamount,helpedtoincreaseherprofitanddevelopherbusiness.

XacBankwasfundedin1998asaUnitedNationsDevelopmentProgrammeMicroStartproject,withaninitial€750,000tolendtopoorpeoplewithbusinessideas.Withinterestincomeandinvestmentfromitsfounders(MercyCorpsandlocalnon-governmentalorganisations,aswellassupportfromTriodosFund,FairShareFund,ShoreCapInternationalandMicroVest),XacBank’scapitalhasgrowntomorethan€7.5millionwithtotalassetsofalmost€60millionin2006.InnineyearsthenumberofXacBank’sclientshasincreasedfrom50to55,000,with90percentofloansmadetosmallbusinesses.

auditorshasbeenapriority.Formicrofinanceinstitutionsoutsideofthebankingsector,theBankhasprovidedtargetedtechnicalassistancetoeachorganisation,identifyingspecificareaswhereassistancehasbeenrequired.TheBankisnowfocusingontransformingthelargestandmostsuccessfulETCmicrofinanceinstitutionsintostrong,fullycommercialorganisations.

Donor and IFI coordinationTheEBRDcontinuestoworkwithotherdonorsinbuildingalarge-scalelendingcapacityinbanksandotherfinancialinstitutionsastheydevelopintocommercialdeposit-takingorganisations.ManyoftheETCsstillsufferfromweakfinancialsystemsandeconomicandpoliticalinstability,andneedsubstantiallong-termtechnicalassistance.MostoftheMSEprojectsbenefitfromthemulti-donorETCFundaswellasfundingfromacoregroupofdonorswithsharedobjectives–BP,theEuropeanUnion,Japan,theNetherlands,Switzerland,TaipeiChina,theUnitedKingdomandtheUnitedStates.Thesedonorshavesofarprovidedover€30millioninTCfunds.

Thesefundshavealreadyenabledpartnerbankstofinanceanever-increasingnumberofloans.However,furtherfundingwillberequired,particularlyforruralfinance.TheEBRDworkscloselywiththeInternationalFinanceCorporation(IFC)andKreditanstaltfürWiederaufbau(KfW)toimplementprojectswithpartnerbanks.TheInternationalCooperationDevelopmentFundofTaipeiChina(TaiwanICDF)hassupportedmanyoftheBank’sMSElendingprogrammes,includingtheETCNon-bankMicrofinanceInstitutionFramework.Morerecently,theBankhasworkedwiththeWorldBanktobuildonestablishedprojects,suchastheKyrgyzAgriculturalFinanceCorporation(KAFC)andtheRuralFinanceCorporationinMoldova,tosupportcommercialsustainablelending.

CasestudyCottonseedoilisbackinTajikistan’snationaldish

WiththeendoftheSovietUnion,thenewlyindependentCentralAsianrepublicofTajikistansawalmostitsentiremanufacturingsectorcollapse.Thisincludedtheproductionofcottonseedoil,anirreplaceableingredientforthecountry’snationalricedish,theplov.

Threeyearsago,localentrepreneurTofikAkhmedovhadtheideatorestartcottonseedoilproductioninthenorthernTajiktownofKhujand.Heboughtanoldex-Sovietpropertywheretherefinerywastobebuilt,importedequipmentfromtheUnitedStates,boughtcottonseeds,hiredstaffandstartedproduction.In2005,hefoundedKomronAgroHoldingtorefinecottonseedoil.

However,KomronAgrohadenoughmoneyforjust8,000tonnesofcottonseedsayear,meaningtheplantoperatedat30percentofitscapacity,butthankstoanEBRDloanofUS$1.4million(€1.1million),agreedinApril2006,MrAkhmedovhasbeenabletobuy24,000tonnesofcottonseedsthatwillkeeptherefineryworkingthroughoutthe10-monthseason.Theloanwasgranted

aftertheBankundertookathoroughtechnicalandlegalduediligenceofKomron,anessentialsteptodeterminethecompany’screditworthinessandtoguideitsfuturebusinessplan.Komron’sduediligenceandtechnicalassessmentwerefundedthroughtheEBRDETCFund,undertheDirectLendingFacility.

Thankstothisassistance,KomronAgroHoldingnowemploys180staffandhasdoubleditscottonseedoilproductionto3,000tonnesperseason.Thishasalsoindirectlyimprovedthelivingstandardsofthe30farmsthatsupplyMrAkhmedovwiththeseeds,becausemorereliablecontractshavemeantmorecashtospendforeachfamilyandthevillage.

Followingthesuccessofthefirstadvertisingcampaign,whichsawsalesgoupby20percent,MrAkhmedovissettoexpandhisbusinessfurther;heiscurrentlyassistingcompaniesinthesouthofTajikistantobuildupcottonseedoilrefineries.Sothefutureoftheplov–completewithitsessentialingredientofcottonseedoil–issafe.

TraditionalsilkpatternusedinUzbekistan.Everyyear30,000tonsofsilkcocoonsareproducedinthecountry.

Direct Investment Facility and Direct Lending FacilityTheDirectInvestmentFacility(DIF)providesequityandlimiteddebtfinancing(usuallybetween€0.5millionand€3million)topromisingprivatesectorbusinesses,especiallythoseledbymotivatedandexperiencedlocalentrepreneurs.TheDirectLendingFacility(DLF)providesfunding(between€0.5millionand€4million)forexpansion,modernisationandacquisitionprojectsintheprivatesector.

TheDIFandDLFareimportantinstrumentsintheETCsforsupportingmedium-sizedenterprises.In2006,eightnewDIFinvestmentsand13DLFprojectswerefinancedinsevencountries.Theseinvestmentssupportedcompaniesinthebeverage,supermarket,icecream,insurance,hotel,fruitprocessing,propertyandtextileindustries.

In2007theDIF,DLFandtheMedium-sizedCo-FinancingFacility(MCFF)willbeavailableinMongolia,wheretheETCFundwillreplacetheMCFforTCprojectfunding.

Financial sector development TCassistanceforfinancialinstitutionsfocusesonimprovingaccesstofundingforenterprises,particularlySMEs.Bytheendof2006,€3.3millionhadbeencommittedbytheETCFundfor13projects,ofwhich€2.2millionhadbeendisbursed.Anothersixprojectstotalling€2millionwereapprovedattheETCFund

“WhiletheETCFundhasalreadycontributedagreatdealtoEBRDprojectsintheearlytransitioncountries,itmustcontinuetosupporturgentmunicipalinfrastructureprojectsinthesecountries.”

BirgerKarlsson MinistryofForeignAffairs,Sweden

AssemblyofContributorsinFebruary2007.TheseincludedaTCassignmenttoimproveinsuranceregulationsinMongoliaandtheGeorgianEnergyEfficiencyProgramme,whichwillsupportthecreditlinetolocalbanksbyprovidinginitialtrainingtothepartnerbanks,coordinatingenergyefficiencyandrenewableenergyprojects,andidentifyingpotentialindustrialandresidentialprojects.Theprogrammeisseekinga33percentcontributionfromtheETCFundtohelpreachthe€2.3millionfundingrequirement.

TCfundsaresupportinginstitutionaldevelopmentandnewfinancialproductsandfacilities.AssignmentsunderwayinfourparticipatingbanksarehelpingtheorganisationstocomplywithEBRDcorporategovernancerequirementsandpromotestability,prudentpracticeandeffectivecustomerservice.Meanwhile,leasingcompanies,particularlythosetargetingSMEsinemergingmarketswheresecuredlendingcanbeproblematic,havereceivedsubstantialinvestmentintraining.AnassignmentforthefirstleasingcompanyinAzerbaijanshouldcommencein2007.Twomortgage-relatedassignmentshavebeenapprovedforArmeniaandGeorgia.Theexpansionofhousingfinance(forhousebuilding,purchaseorrenovation)shouldencouragegrowthinconstructionactivityandcontributetosustainableeconomicdevelopment.

“SidahascontinuedtosupporttheETCregionthroughacooperationarrangementwiththeEBRDthatcoversbothtechnicalassistanceandinvestmentco-financing.Wehavesofaridentifiedabout10municipalenvironmentprojectsthatwillbenefitfromsuchsupport.”

PeeterHorm SwedishInternationalDevelopment

CooperationAgency(Sida)

TurnAround Management and Business Advisory Services programmesTheTAMandBASprogrammesprovideexperttechnicalandmanagementadvicetolocalbusinesses.In2006theycommittedalmost€3millionreceivedfromCanada,theETCFund,Japan,Luxembourg,theMCF,SwitzerlandandTaipeiChinaintheETCregion.

TheTAMprogrammehasworkedwithover144companiesinalloftheETCs(includingMongolia)since1997.DuringthisperiodCanada,theETCFund,theEuropeanUnion,Japan,theMCF,SwitzerlandandTaipeiChinahavecommittedover€11.8milliontotheprogramme.

In2006,13TAMprojectswerestartedintheregion.TAM/BAS-assistedcompanieshaveattracted€85millionofinvestmentfromtheEBRDandrelatedinstitutions,reflectingtheirincreasingcreditworthiness.InadditiontoestablishedSMEsupportmeasures,theTAMprogrammeisalsoimplementingnewprojectsinAzerbaijanandtheKyrgyzRepublicthatfocusontheinformationandcommunicationstechnology(ICT)businesssector.BASoperationsinTajikistanshouldbeginin2007.

Legal reformDuring2006theEBRD’sLegalTransitionProgrammelaunchedtwoprojectsinMongoliawiththehelpofdonorfunding.Thefirstprovidedlegalassistancetothegovernmenttodealwiththeprivatisationandregulationofthetelecommunicationssector.Thesecondfocusedonreformofthelegalregimeforsecuringloanswithmovablepropertypledgedascollateral.EBRDrecommendationspresentedtotheMongoliangovernmentinNovember2006willformthebasisforreformstobeimplementedoverthenextfewyears.BothprojectsarefundedbytheMCF.

During2007,basedonanEBRDprojectinMoldovafundedbytheSwissgovernment,theLegalTransitionProgrammeisaimingtoissuestandardsforenactingeffectivemortgagelegislationinthecountrieswheretheBankoperates.

IntheKyrgyzRepublictheBankbeganimplementingaprogrammetohelpjudgesdealwithcommercialissues.FundedbytheETCFund,JapanandSwitzerland,itaimstostrengthenlocaljudicialeducation,tocreatealawlibraryandtoestablishinternshipsabroadforyoungjudgeswithleadershippotential.AlsointheKyrgyzRepublic,theEBRDhaspreparedanactionplanforenhancinginvestorprotectioninthesecuritiesmarket,andhascontinuedtodevelopalegalframeworkforthetelecommunicationssectorandtoimproveaccesstoICTinthecountry(seecasestudyonpage25).

CasestudyModerncommunicationsfortheKyrgyzRepublic

Accesstonetworksforinformationandcommunicationstechnology(ICT)iscrucialtoeconomicgrowthandsocialinclusion.However,inmanytransitioncountries,telephoneservicesandinternetconnectionsaremainlyconfinedtocitiesorlargerpopulationcentresandmaybesporadicatbest.

IntheKyrgyzRepublictheEBRDisprovidingtechnicalassistancetoovercomelegal,technicalandeconomicobstaclestoreliableandaffordableuniversalaccess,particularlyinruralareas.

Forinterconnectionandtariffing,theBankishelpingtheauthoritiestocollectallrelevantstatisticalinformationinordertopreparethenecessaryenablinglawsandregulations.Forbetterruralaccess,ithasbeenconductingastudythroughoutthecountrytogaugethecost,levelofdemandandaffordabilityofcommunicationsservices.

TheEBRDwilladvisetheKyrgyzauthoritiesonaddressingthecostofuniversalaccessthroughcontributionsfromtheservicerevenuesoflicensedoperators,fromgovernmentand,perhaps,fromdonors.

Georgian embroidered bag

2� Early transition countries

Other sectors

Economic reformAnimprovedinvestmentclimateintheETCsisexpectedtoleadtohighereconomicgrowth,inparticularintheSMEsector,thereforehelpingtoalleviatepoverty.InArmenia,GeorgiaandtheKyrgyzRepublic,theETCFundissupportingInvestorCouncilstoencouragedialoguebetweenthebusinesscommunityandgovernmentpolicy-makers.ItisexpectedthatanewInvestorCouncilwillbeestablishedinGeorgia,theexistingoneinArmeniawillbereinforced,andaformerCouncilintheKyrgyzRepublicwillberevived.

Energy In2006Armenia,AzerbaijanandGeorgiabenefitedfromenergysectorfundingfromtheETCFund.Inparticular,theAzeristate-ownedelectricitycompanyAzerenerjiJSC,followingasubstantialloaninOctober2005,isupgradingtheAzDRESPowerPlant,thecountry’slargestthermalpowerstation,andimplementingacomprehensiveenvironmentalandhealthandsafetyactionplan.TheETCFundisalsosupportingthedevelopmentofanewtariff-settingsystemandutilitysectorregulationinAzerbaijan.

Environmental and social issuesThereisanurgentneedformoreinvestmentinenvironmentalinfrastructure,suchaswatersupply,sanitationservicesandsolidwastemanagement.However,municipalitiesstilllacktheskillsandexperiencetodevelopappropriateprojectsthatcanbeconsideredforfinancingbytheEBRDandotherinternationalfinancialinstitutions(IFIs).

CasestudyRenewableenergyforArmenia

Toreduceitsdependenceonnuclearpower,oilandgas,theArmeniangovernmentwantstoincreaseenergyoutputfromrenewablesources.About36percentofthenationalpowersupplycomesfromhydropower,butthegovernmentwantsasmuchas70percentofitsenergytocomefromrenewablesby2020.Newregulatoryandtaxlegislationisencouragingprojectsinthesector.

CascadeCredit,alendinginstitutionestablishedin1994byGerardCafesjian(aUScitizenofArmeniandescent),hasbeeninvestinginsmallhydro-powergenerationprojectsandothercompetitiverenewableenergyventurestofosterenvironmentallyfriendlyeconomicdevelopment.

Committedtoinvestmentinrenewablepower,theEBRDhasgoneintopartnershipwithCascadeCreditthrougha€5.4millionloantothecompany,combinedwith€3.8millionfromtheWorldBankand

€2.3millionfromtheCafesjianFamilyFoundation(CFF).Thiswillprovidelong-termfundingforrenewableenergyprojects–primarilymini-hydrogenerationbutpotentiallywindandbiomassaswell.Theprojectwillalsobenefitfrom€2.3millioningrantfundingfromtheGlobalEnvironmentFacility.

Initsfirstyearofoperation,CascadeCreditexpectstofinancebetweensevenand10mini-hydroprojects,providing70percentoftheprojectcost.Theother30percentwillbeprovidedbyprivatedevelopers.Sincerenewableenergysourcescreateminimalgreenhousegasemissions,CascadeCreditwillhelpitsclientssellcarboncreditsundertheCleanDevelopmentMechanism(CDM)frameworkoftheKyotoProtocol.TheETCFundhasprovidedTCfundingtoassistCascadeinregisteringitsinvestmentprojectsundertheCDMframework.Thissupportshouldeventuallyattractco-financingfromotherlocalbanks.

“IbelievetheEBRDhasshowntheeffectivenessofworkinginpartnershipintheearlytransitioncountries.Weshouldthereforeallowitsomeflexibilityinproposinginnovativeprojectsinthesecountries.”

Jean-ClaudeJuncker PrimeMinisterofLuxembourg

AlongwithETCFundsupport,theEBRDorganisedaworkshopinArmeniaformunicipalstaff.TheaimwastoenablethemtodevelopbankableenvironmentalinvestmentprojectsandtofosterconstructivedialoguebetweenmunicipalitiesandtheEBRDandotherIFIs.ThiswillcomplementrelatedworkonenvironmentalfinancingstrategiesbeingcarriedoutbytheEnvironmentalActionProgrammeforCentralandEasternEuropeTaskForceinArmenia.

TheUK’sDepartmentforInternationalDevelopment(DFID)andtheCanadianInternationalDevelopmentAgency(CIDA)aresupportingaprojecttoassessgenderequalityissuesintheBank’scountriesofoperationsandthepotentialforgivinggreaterweighttogenderissuesintheBank’soperations,basedonresearchinBulgaria,GeorgiaandtheKyrgyzRepublic.ThesummaryreportwillbereleasedontheBank’swebsite.

Municipal and environmental infrastructure TheEBRDprovidedfundingof€5.5millionin2006fortwowaterprojectsinGeorgiaatPotiandKutaisi(servingpopulationsof60,000and186,000respectively).Bothprojectsbenefitedfrominvestmentgrantco-financingfromtheSwedishInternationalDevelopmentCooperationAgency(Sida)of€4.4million,theUSMillenniumChallengeCorporationforanequivalentof€4.3millionandtheEuropeanUnionWaterInitiativefor€1.5million.TheETCFundalsocommittedTCfundsforthetwowatersupplyprojectsinGeorgia.TheTCswillcomplementtheEBRD’sinvestmentprojects

inGeorgiabystrengtheningthedeliveryofwaterservices.Thiswillbedonethroughfinancingcriticalinvestmentsinkeycitiesthatarewillingtoimplementreformssuchastariffpoliciesdesignedtotakeintoaccountaffordabilityconcernsaswellasimprovedcollections.InadditiontothePotiandKutaisiprojects,SidahascommittedtofundtwoassignmentsinTbilisiinrelationtoaninvestmentprogrammetorenovatetheTbilisimunicipalwatersupplysystem.Mongolia’scapital,Ulaanbaatar,willbenefitfromanimprovedurbantransportnetworkwithinvestmentgrantco-financingprovidedbytheNetherlandsthroughtheETCFund.

Transport InMay2006theEBRDprovidedloanfinancingof€20.8millionforthedevelopmentofTbilisiInternationalAirportinGeorgiaand€15.4millioninJulyforArmeniaInternationalAirportinYerevan.TheBankiscommittedtoencouraginggreaterprivatesectorinvolvementinthemanagementandoperationoftransportinfrastructure.TheBankmobilised€1.5millioningrantfundsfromtheNetherlandsin2006tosupporta€6millionroadmaintenanceprojectinTajikistan.TheBankwillprovidealoanof€4.6millionforthisproject,whichwillimproveTajikistan’scapacitytoundertakeroadmaintenance.ThiswillcomplementfinancingfromtheAsianDevelopmentBankandIslamicDevelopmentBankfortheupgradingofkeyroadtransitcorridorsinTajikistan.

InvestmentclimateStronggrowthandtheprospectofaccessiontotheEuropeanUnionforsomecountriesintheWesternBalkanshaveboostedinvestorconfidence,leadingtohigherinflowsofforeigndirectinvestment.WithMontenegro’snewlyacquiredindependenceandKosovo’sdevelopmentneeds,additionaldonorfinancingwillberequiredinthecomingyears.

TransitionchallengesThemainchallengesareto:

y improveaccesstofinanceandupgradetransportinfrastructuretosustaintradewithintheWesternBalkansandtointegratetheregionintotheEUeconomy

y speedupprivatisationandtherestructuringoflargecompaniestoimprovecompliancewithinternationalenvironmentalstandardsandtopromotebetterbusinesspractices,leadingtosustainedgrowth.

�Western Balkans

ImprovementstoinfrastructureandprivatesectorgrowthremainkeyprioritiesfortheEBRDintheWesternBalkans.Thankstodonorfinancing,theBankissupportingsmallbusinesses,developinglocalfinancialinstitutions,andfundingimportantmunicipalservicesandtransportprojects.

y TheWesternBalkansreceiveddonorfundingof€15.3millionin2006.

y TheEBRDestablishedtheWesternBalkansFundwithstrongsupportfromtheinternationaldonorcommunity.

y TheEuropeanInvestmentBankandtheEBRDco-financedmajorinfrastructureprojectsinBosniaandHerzegovinaandinSerbia.

Project Albania Bosniaand FYR Montenegro Serbia(incl’ Regional Total Herzegovina Macedonia Kosovo)

Financialinstitutions 160 – 800 – 2,536 – 3,496

TurnAroundManagementandBusinessAdvisoryServicesprogrammes 287 332 199 1,016 3,251 1,234 6,319

Municipalandenvironmentalinfrastructure 796 – 277 – – – 1,073

Transport 250 966 249 – 340 – 1,805

Energy – – 141 – – – 141

Investmentsupport – – – – – 2,000 2,000

Other(forexample,tourism) – 340 11 – – 130 481

Total 1,493 1,638 1,677 1,016 6,127 3,364 15,315

Note:Regionalfundingreferstoprojectsthatwereundertakenintwoormorecountries.

Donorfinancingin2006totalled

€15.3m

Table 3.1TC commitments in 2006 by country (€’000)

�0 Western Balkans

Chart 3.1TC commitments in the Western Balkans, 2001–06 (€ million)

0301 04 05 0602

“TheCEIhasprovedtobeanimportantforumforpoliticaldialogue.Itsfocushasrecentlymovedtowardsnon-EUmembercountriesintheWesternBalkansandineasternEurope.PrioritysectorsfortheInitiativearecapacitybuilding,transport,energyefficiencyandtheenvironment.”

LauraMirachian MinistryofForeignAffairs,Italy

Donorfundingin2006totalled€15.3million,slightlydownfrom€16.2millionthepreviousyear.Projectsupportcontinuedtotargetsmallandmedium-sizedenterprises(SMEs),thefinancialsector,andmunicipalandcountry-wideinfrastructure.

TheprincipaldonorsweretheEU-fundedEuropeanAgencyforReconstruction(EAR;contributing€4.8million),Italy(€3.3million),Canada(€1.5million),andFrance,JapanandtheNetherlands(about€1millioneach).Serbia,includingKosovo,receivedthelargestportionoffunding(€6.1million)followedbyBosniaandHerzegovina(€1.6million)andFYRMacedonia(€1.6million).InAlbania,fundsforbusinesssupportwereprovidedbyCanadaandJapanthroughtheEBRD’sTurnAroundManagement(TAM)programme,whileItalyhelpedtodesignatransportstrategyforthecapital,Tirana,andfundedawaterresourcesstudyinthesouthofthecountry.GreecesupportedtheAlbanianSecuritiesCommissionindraftinganewlawonbondissues.

InBosniaandHerzegovina,fundingfromCanada,JapanandSpainmainlysupportedsmallbusinessdevelopment.Francehelpedtofundatourismstudyandtoprepareanationaltransportstrategy.TheCentralEuropeanInitiative(CEI)aidednationalrailwayrestructuringandtheUnitedStatesTradeand

DevelopmentAgency(USTDA)backedanairtrafficnavigationandcontrolproject.

InFYRMacedoniatheEBRDinvestedinTTKBankADSkopje,amedium-sizedbankprovidingfinanceforSMEsacrossthecountry.Theinstitutionalbuildingplanisbeingfinancedthroughtechnicalcooperation(TC)fundsfromtheNorwegianMinistryofForeignAffairs(seepage32).SeveralotherdonorshavesupportedTAMprojectsandprovidedfundsforTCassignmentsrelatedtoinvestmentsinthemunicipalsector.Austria,Canada,theCEI,Denmark,Ireland,JapanandtheUnitedKingdomhavebeenkeydonorsinthecountry.

InMontenegroinvestmentofover€1millionthroughtheTAMandBusinessAdvisoryServices(BAS)programmeshashelpedlocalSMErestructuringandstart-upswithrelevantcontributionsfromtheEAR.Additionaldonorfundingwillsupportprojectsininfrastructurerestructuringandcommercialisation.

Serbiaattractedthegreatestlevelofsupportin2006.Donorfundinghashelpedtostrengthenlocalfinancialinstitutions,introducenewfinancialproducts,supportrailwayrestructuringandprovideadvisoryservicestolocalbusinesses.TheEARhasfundedextensiveTAMprogrammesinSerbia,includinginKosovo.OtherkeydonorswereCanada,theCEI,France,Italy,JapanandtheUnitedKingdom.

��

“AustriahasstronglysupportedtheEBRD’seffortstoestablishamulti-donorfundfortheWesternBalkansasawayofincreasingdonorcoordination,especiallyincriticalinfrastructureprojects,andenhancingeconomicintegration.”

ThomasWieser MinistryofFinance,Austria

Sincetheearly1990s,theEBRDhasinvestedmorethan€2.4billionintheWesternBalkans,supportingprojectswithatotalvalueofalmost€5.5billion.Donor-fundedTCremainsacrucialfocalpointoftheBank’soperationalstrategyintheregion.

In2006theEBRDestablishedthemulti-donorWesternBalkansFundwithcontributionsfrom14countries(seeboxonpage33).Forthefirsttime,theBankwelcomedthegovernmentsoftheCzechRepublic,Poland,theSlovakRepublicandSloveniatothedonorcommunity.

In2006theItaliangovernmentandtheEBRDsignedanagreementfortheestablishmentofanewinstrument–theItaly-EBRDWesternBalkansLocalEnterpriseFacility–toprovideequity,risk-sharinganddebtfinancingtolocalenterprises.ThisnewfinancinginstrumentbuildsonthesuccessfulItalianRisk-sharingFacility.TheBankwillcontribute€20milliontothenewfacilityandtheItaliangovernment€10million.TCsupportof€2millionwillalsobeprovidedbyItaly.

DuringtheyearalargeproportionofTCfundingwascommittedtosupportinglocalenterprisesthroughtheTAMandBASprogrammes(€6.3million),strengtheninglocalfinancialinstitutions(€3.5million)andprovidingprojectassistancetothetransport,municipalinfrastructureandenergysectors(€1.8million,€1millionand€0.14millionrespectively).TheItalian-fundedLocalEnterpriseFacilityhelpedtoidentifyinvestmentopportunities,withTCsupportof€2million,andtheFrenchgovernmentcommitted€340,000foratourismstudyinBosniaandHerzegovina.

Micro and small enterprise lendingMicro,smallandmedium-sizedenterprises(MSMEs)arethebackboneoftheeconomiesoftheEBRD’scountriesofoperations,includingtheWesternBalkans.Improvingtheiraccesstofinanceisanimportantsteptowardsensuringsustainedgrowth.TheBankextendscreditlinesandmakesequityinvestmentsinlocalbanksandmicrofinanceinstitutions,suchasnon-governmentalorganisations(NGOs),toincreasetheirlendingcapacityandtoencourageacultureofsmallbusinesslending.Donorfundsfortechnicalassistanceareacrucialcomponentofthisstrategy.

In2006theBankapprovedanew€75millionfacilityaugmentingtheexistingWesternBalkansSMEFinanceFramework.Itaimstoextendsmallbusinessaccesstofinancialinstitutions,improvefinancialintermediationintheregionandstrengthencompetition.

TheEBRDisenlistingdonorsupportforthecommercialisationofexistingmicrofinanceNGOsinBosniaandHerzegovina.InFYRMacedoniaithaslentTTKBankADSkopje,amedium-sizedbank,€5milliontoexpandsmallbusinessfinanceacrossthecountry.TheloanfallsundertheWesternBalkansSMEFinanceFramework.TheItaliangovernmentwillalsoprovideTCfundsundertheCooperationFundforPrivateSectorDevelopmentintheWesternBalkanstohelptrainTTK’semployeesinmodernSMElendingtechnologies.

TheEBRDhasalsoacquireda25percentstakeinTTKtosupportrestructuringandgrowthplans,includinganinstitutionalbuildingplantoraisecorporategovernancestandardstointernationallevelsandtostrengthencontrolprocessesandriskmanagementprocedures.TheplanwillbefinancedthroughTCfundingfromtheNorwegianMinistryofForeignAffairs.

“TheEU’senlargementinsouth-easternEuropewillcontinue.Thecountriesoftheregionneedit–butsodoestheEU.Thiswillmeanthatthepresent‘enlargementfatigue’couldendwithinthenextcoupleofyears.”

ChristopherCviic ConsultantSeniorPoliticalCounsellor,

EBRD,speakingattheWesternBalkansFundAssemblyon2March2007

“SecoseestheEBRDasakeypartnerinhelpingtheWesternBalkancountriesbenefitfromremittancessenthomefromtheirworkersabroad.”

EstherHauertWermuth SwissStateSecretariatforEconomic

Affairs(Seco),Switzerland

CasestudyTheWesternBalkansFund

TheEBRD’sAnnualDonorMeetingin2005reviewedtheBank’sstrategyformobilisingassistanceandcoordinatingactionwithdonorsintheWesternBalkans.CitingthesuccessoftheEarlyTransitionCountriesFund,donorsaskedtheBanktoconsiderasimilarinitiativefortheWesternBalkans.

Follow-updiscussionswithdonorrepresentativeswereheldin2006toidentifythepriorityneedsintheregionandtoclarifythebenefitsthatanewmulti-donorfundcouldprovide.Itwasagreedthatthefundshouldpromotecoordinatedandefficientassistanceforinfrastructuredevelopment,SMEaccesstofinance,institutionalreformandcross-bordercooperation.

InauguratedinNovember2006,thenewmulti-donorWesternBalkansFundaimstomobiliseandcoordinateadditionalgrantresourcesforAlbania,BosniaandHerzegovina,FYRMacedonia,MontenegroandSerbia(includingKosovo).

TheFund’scontributorsareAustria,Canada,theCzechRepublic,Finland,Ireland,Luxembourg,theNetherlands,Norway,Poland,theSlovakRepublic,Slovenia,Spain,SwedenandtheUnitedKingdom.TheparticipationoftheCzechRepublic,Poland,theSlovakRepublicandSloveniaisparticularlysignificant,astheyarethefirstEBRDcountriesofoperationstojointheBank’sdonorcommunityascontributors.

TheFundoperatesasanuntied,multi-donorcooperationfund(untiedmeaningthatthemoneycanbeusedwithoutany

restrictionastothenationalityofthefirmorexpertscontractedinaparticularproject).ItismanagedbyanAssemblyofContributors(thedonors),supportedbytheOfficialCo-financingUnitoftheEBRD,whichactsasitsSecretariat.Throughitsmultilateralstructure,theFundwillhavegreaterflexibilityforeachprojectandwillbeabletorespondmorequicklyandeffectivelytothedemandsoflargerprojectsinvolvingmorethanonecountry(traditionallyproblematicforasingledonor).TheAssemblywillalsoprovideachannelforidentifyingco-financingopportunitiesandaforumforpolicydiscussionsatprojectandstrategiclevels.

TheFundfocuseson:

y improvingaccessto,anddeliveryof,affordablebasicservices,suchaswater,electricity,transportandcommunications

y promotingasoundenvironmentforprivatesectordevelopment,witheffectivelegalandregulatoryframeworksandtransparentaccountingandcorporategovernancepractices

y encouragingmicro,smallandmedium-sizedenterprisesbystrengtheningaccesstofinanceandadviceandsupportingthecreationofnewbusinesses,especiallybywomenentrepreneurs

y strengtheningfinancialinstitutionsy promotingsustainableenvironmental

standardsy extendinginnovativeandinclusive

initiativestoharnessthepotentialofthewidercommunity.

Sincetheearly1990s,theEBRDhasinvestedmorethan

€2.4bn intheWesternBalkans

��

Architectural detail, Belgrade

CasestudyMakingabigimpactwithsmallloansinFYRMacedonia

Microandsmallenterprises(MSEs)havealwaysbeenintegraltoeconomicdevelopment.WithdonorfundingfromtheUS/EBRDSmallAndMedium-SizedEnterpriseFacility,ProCreditBankMacedoniaisprovidinginvaluablesupporttoagrowingnumberofsmallentrepreneurs.Thisdevelopment-orientedbank,inwhichtheEBRDholdsanequitystakeof12.4percent,ispartoftheProCreditglobalnetworkoffinancialinstitutionsoperatingin18countriesandfocusingonlendingtoMSEs.ThemajorityofProCreditBankMacedonialoansareforsumsunder€10,000.

EntrepreneurSashoKuzmanovskiisoneofthemanybeneficiariesofthiscreditfacility.In1999heopenedtheIkonabookstorewhich,despitethecountry’sseriouspoliticalandsocialturmoilin2001,provedasuccess.Subsequently,withaviewtoexpansion,heapproachedProCreditBankMacedoniawiththerequestfora€6,000

loan.Heusedthemoneytopurchasespecialisedbooks,technicalmanuals,foreignlanguagepublicationsanddictionaries,whichwerestillrareonthedomesticmarket.Strongdemandgeneratedfurtherexpansion.WiththreeIkonabookstoresinthecapital,Skopje,heisplanningtoopenfurtherbrancheswiththehelpofanotherloan,thistimefor€14,000.

Anotherentrepreneur,GoranGorkievski,ownstheSpecijalbakeryinSkopje,whichhestartedin1991.Tofinanceexpansion,heturnedtoProCreditBankMacedoniaforhisfirstloaninSeptember2003.The€30,000advancefinancedtheconstructionofnewbusinesspremiseswithanenlargedbakery.InOctober2004hetookoutanotherProCreditloanfor€50,000tofundfurtherexpansionofhisbakerybusinessandanewrestaurantinthecentreofSkopje.SpecijalhasbecomeahouseholdnameinFYRMacedonia.

In2006over

€6.3mingrantswasprovidedtoimplementTAMandBASactivitiesintheWesternBalkans

Duringtheyear,

71 TAMprojectsstartedintheregion,bringingthetotalnumberinprogressto

��

Building stronger businessesTheTAMprogrammeusesindustry-specificmanagementexpertisetohelpenterprisesdevelopnewbusinessskillsattheseniormanagementlevel.TheBASprogrammeisamulti-donor-fundedprogrammewhichhelpsMSMEs(from10-500employees)improvetheircompetitivenessbyusinglocalbusinessadvisers.

In2006over€6.3millioningrantswasprovidedtoimplementTAMandBASactivitiesintheWesternBalkans.Duringtheyear,71TAMprojectsstartedintheregion,bringingthetotalnumberinprogressto119.SincetheprogrammebeganintheWesternBalkans,ithasimplementedmorethen340assignments,anddonorshavecontributedabout€15.7million.TheEARhasbeenthekeyTAMdonor(approximately€11million),togetherwithCanada,Ireland,ItalyandtheJapan-EuropeCooperationFund.TheTAMprogrammehasfocusedincreasinglyonSMEsupportinruralandlessdevelopedareas.

TheBASprogramme,supportedmainlybytheEAR,LuxembourgandtheNetherlands,hassixofficesintheWesternBalkans(inTirana,Sarajevo,Pristina,Skopje,PodgoricaandBelgrade).OperationsinAlbaniaandSerbiastartedin2006.Overall,266BASprojectswereundertakenintheregionduringthatyear.

Since2001,over760projectshavebeenimplemented,withalmost600completedsofar,representingatotalturnoverofalmost€1.3billionandinvolving124,000employees.Theprogrammeisstrengtheningcross-borderinitiativeswhichenhanceorre-establishtrade

andbusinesslinksinpreviouslyintegratedregions.In2006aBASprojectsupportedbytheNetherlandshelpedacompanyinKosovosuccessfullyupgradeitsglobalpositioningsystem(GPS)technologyservices.WithTAMassistancefundedbytheEAR,themanagementteamofNišairportinSerbiabenefitedfromadviceonthefreemarketregulationofairtransportandtheformulationofapragmaticbusinessplan.

Trade Facilitation Programme TheTradeFacilitationProgramme(TFP)promotesforeigntradeintheEBRD’scountriesofoperations.Italsosupportsintra-regionaltradethroughthecreationorrestorationoftraditionaltradelinksbetweencountries.IntheWesternBalkans,over50percentoftradedealssince1999haveinvolvedsumsunder€100,000,emphasisingtheimportanceofSMEsincommerce.Austria,theEBRD,NorwayandSwitzerlandhavesupportedtheTFPthroughtheBalkanRegionSpecialFund.

Legal reformTheEBRD’sLegalTransitionProgrammeusestechnicalassistancetodevelopinvestor-friendlylegalsystemsintheBank’sregionofoperations.In2006theAlbanianSecuritiesCommissionaskedforassistancetoimproveitslegalandregulatoryframeworkgoverningcorporategovernanceandtheissuanceofbondsbycorporateentitiesandmunicipalities.TheGreekgovernmentagreedtofundastudyonestablishinganactiveandefficientdomesticbondmarketforraisingdebtcapitalandfinancingeconomicdevelopment.

“IntheWesternBalkans,Norwayhasfocuseditsfundingonjobcreationandtheimprovementofinfrastructure,whichwillhelpcreatefurtherinvestmentopportunitiesintheregion.Thismustbeaccompaniedbyacommitmenttotransparency,anti-corruptionandgoodcorporategovernanceateverylevel.”

PerKjellMannes MinistryofForeignAffairs,Norway

�� Western Balkans

Other sectors

Energy Akeydeterminantofasuccessfulenergymarketistheextenttowhichenergypricesreflectactualcostsforeachcategoryofcustomer.Tocorrectexistingpricestructures,whereindustrialuserspayahigherpricethanresidentialcustomers,requiresasignificanteffortandsubstantialrisesinresidentialcharges.AnimportantTCassignmentsupportedbytheDanishgovernmentadvisedtheauthoritiesinFYRMacedoniahowtohelpthemostvulnerabledealwithrisingenergytariffswithouthinderingthedevelopmentoftheenergysector.

Financial sectorIn2006theEBRDacquireda25percentstakeinCacanskaBanka,amajoritystate-ownedbankinCacak,centralSerbia,tohelpwithitsrestructuringaheadoffullprivatisation.TheEBRDaimstocreateaninstitutioncapableofcompetingefficientlyinanincreasinglysophisticatedfinancialmarketandisimplementinganinstitutionalbuildingplansupportedwithTCfundsfromtheEAR.TheplanhasbeendevelopedincooperationwiththemanagementofCacanskaBankaandwiththegovernmentasashareholder.Itwillhelpraisecorporategovernancestandardstointernationallevels,strengthencontrolprocessesandcreditandriskmanagementprocedures,trainstaffandimprovecustomerservices.ItalianfundshavebeencommittedtoprovideFactoring*AdvisoryServicestobanksandfactoringcompaniesinSerbia.

IndustryIn2006theEBRDadvanceditsfirstdirectloantoaprivatecompanyinKosovotohelpfinancebusinessexpansion.The€1.3millionloanwillenableEuroFat,alimitedliabilityfirmproducingpolystyreneinsulatingpanels,tomorethandoubleitsoutputtosatisfyincreasingdemand.TheloanisalsosupportedbytheItalian-fundedWesternBalkansLocalEnterpriseFacility,whichprovidesindividualinvestmentsintherangeof€1millionto€4millionaswellastechnicalassistanceifrequired.

InfrastructureTheEBRDhasbeenactiveinfinancingmunicipalinfrastructureintheWesternBalkans–providingequipmentandservices,strengtheningregulatorystructures,promotingprivatesectorinvestment,andfacilitatingEUgrantandloanco-financing.In2006donorfundingof€1millionsupportedTCinvestmentsinAlbaniaandFYRMacedonia.Themaindonorswere:

yItaly,whichsupportedanassignmenttopreparearoadtransportstrategyfortheAlbaniancapital,Tirana

yAustria,whichfundedexpertprogrammemanagementandcontractsupervisionforawatersupplyandsewerageprojectinFYRMacedonia

yCanada,whichsupportedawatersupplyandwaste-waterinvestmentprojectinFYRMacedonia.TheUnitedKingdomfundedatrafficmodelandeconomicevaluationforaby-passroadinBelgrade,Serbia.

“Italyhasalong-standingandproductivepartnershipwiththeBank.TheWesternBalkansremainsanabsolutepriorityforItaly,andthroughournewlycreatedEBRD-ItalyWesternBalkansLocalEnterpriseFacility,weaimtoprovidevariousformsofsupporttolocalenterprisesintheregion.”

IgnazioAngeloni MinistryoftheEconomy

andFinance,Italy

* Factoringisafinancialmechanismthatlowerstheriskofasellernotreceivingpayment.Abankorfactoringcompanyagreestopurchaseinvoicesfromabusinessinreturnforcash.Thefactoringcompanythencollectspaymentforthefullamountoftheinvoicesandacceptsanycreditriskattachedtothem.Inexchangeforthisservice,thefactoringcompanypaystheinvoicestotheselleratadiscountedprice.

��

CasestudyIntegratingtheWesternBalkansintotheEuropeaneconomy

TheCentralEuropeanInitiative(CEI)fostersregionalintegration.Throughitsgrant-aidedtechnicalcooperationprojects,ithasaimedtostrengthenthelegal,economicandfinancialenvironmentofrecipientcountriesandtopromoteharmonisationwiththewiderEuropeaneconomy.TheCEIoperateswithintheOfficialCo-financingUnitoftheEBRD,whereitmanagestheCEITrustFund,atiedfundsupportedbytheItaliangovernmentwithatotalallocationamountingto€28million.

Throughitstechnicalcooperationactivitiesand“Know-HowExchange”programmes,theCEIpromotesthedisseminationofexpertiseandtechnicalknowledgetobridgetheskillsgapbetweenthemostadvancedandleastadvancedtransitioncountries.Ithasassumedanever-expandingroleinregionaldevelopmentthroughtheleverageachievedbyitsprojects–in2005-06,forinstance,eacheuroinvestedbytheCEIgenerated€177ofadditionalinvestment.

AttheCEI’sSummitEconomicForuminTirana(Albania)inNovember2006,discussionscentredonthethemeof“Fosteringreformsandinnovationforsustainablegrowth”.TheForumhostedofficialbusinessseminarsalongsideCEIheadsofgovernmentandministerialmeetings.Justover1,000participantsfrom36countriesattendedover70formalandinformalmeetings.

Theformalsessionsconsideredthreemainthemes–fosteringthebusinessclimate;exploitinglocalpotential;andinvestingininnovation.Overall,theForumconcludedthat,despitebettermacroeconomicconditionsandstrongerpoliticalbackingforreformsintheWesternBalkans,theenforceabilityoflegislationandself-regulatingcodesremainsanobstacle.Supportingreformsininnovation,enhancingintra-regionaltradeandassistinginthedevelopmentofinfrastructurewillbeprioritiesfortheCEIinthecomingyear.

In2005-06,eacheuroinvestedbytheCEIgenerated

€177ofadditionalinvestment

�� Western Balkans

CasestudyMunicipalcreditworthinessinTirana,Albania

Institutionalreformsandsubstantialinvestmentsinmunicipalinfrastructureareneededtorespondtogrowthinurbanpopulationandtrafficinthetransitionregion.However,lackofaccesstocredithasdeterredmanyviableprojects.TheCreditworthinessEnhancementProgrammeforthecityofTiranahasbeenspecificallydesignedtostrengthenthecreditcapacityoftheAlbaniancapital.

Throughthistechnicalcooperation(TC)project,sponsoredin2006byItaly’sCentralEuropeanInitiativeTrustFund,Tiranawillbenefitfromimprovedmonitoringandcontrolofitsfiscalrevenuesandexpenditure,aswellasthere-organisationofitscitytreasurydepartmentintoasinglemanagementunit.

Inaddition,theassignmentwillhelplocalcivilservantsimplementanti-corruptionmeasuresandpromotefaircompetitionandtransparencyintheprovisionofmunicipalservices.

AdditionalTCfinancewasalsoprovidedbyItalythroughtheItalianCooperationFundtodevelopasustainabletransportstrategyforthecityofTirana.

TherelatedTiranamunicipaltransportproject–theEBRD’sfirsttransactionintheAlbanianmunicipalsector–involvestheEBRDprovidingasovereignloanof€14.6milliontohelpaddresssignificantdeficienciesinurbantransportandinfrastructureservices.

FollowingtheprovisionofTCfunding,theEBRDprovidedasovereignloanofover

€14mtohelpaddresssignificantdeficienciesinTirana’surbantransportandinfrastructureservices

“TheWesternBalkanshavebeenatthecentreofSlovakforeignpolicyformanyyears,reflectingtheSlovaknation’sclosetieswiththisregion.Havingexperiencedthetransitionprocessfromacentrallygovernedtofullmarket-orientedeconomy,theSlovakRepublicunderstandshowimportanteconomictransitionisforthisregion’sfuture.”

MarioVircik DepartmentofInternationalRelations,

MinistryofFinance,SlovakRepublic

TransportThetransportsectorhasbeenparticularlyreliantondonorfunds.In2006theUnitedStatesTradeandDevelopmentAgency(USTDA)helpedtheDirectorateofCivilAviationinBosniaandHerzegovina’sMinistryofCommunicationandTransporttopurchaseandinstallnavigational,communicationsandmeteorologicalequipment.TheprojectalsofundedstafftrainingintheuseofthenewequipmentandexperthelpincreatinganewairnavigationservicetocontrolBosnianairspace.FranceprovidedfundingforrailwayrestructuringinSerbiaandfordraftinganationaltransportstrategyforBosniaandHerzegovina.

TheCEIprovidedconsultancysupportforrailwayrestructuringinBosniaandHerzegovina,helpedfinanceanairnavigationsysteminFYRMacedoniaandfundedanenvironmentalanalysisrelatedtoPristinaAirportinKosovo.FranceprovideddonorfundsforrailwayrestructuringinSerbiaandfordraftingaSerbiannationaltransportstrategy.

Official co-financingIn2006morethan€167millionwasprovidedbyofficialinstitutionstoco-financeimportantprojectswiththeBank.InclosecooperationwiththeEuropeanInvestmentBank,twolargeprojectsweresignedtosupportrailwayrestructuringinBosniaandHerzegovinaandSerbia.Intheformer,aregulatoryboardwasestablishedandrailwayoperationsandinfrastructurewereseparated.Inthelatter,theassignmentfocusedonlabourrestructuringandthedivestmentofnon-coreactivities.Inaddition,ItalysupportedtheEBRDintheprovisionofa€3millionloantoestablishtheNewBankofKosovoundertheEBRD-ItalyWesternBalkansLocalEnterpriseFacility.TheloanwillenableNewBankofKosovotoon-lendfinancetoMSMEs.

InvestmentclimateStronggrowthbasedonnaturalresources,metalsandothercommoditieshasgeneratednewwealthandboostedprivateconsumption.However,ithasalsofuelledinflationarypressuresthatneedtobecontainedtoavertmacroeconomicimbalancesandtoreducevulnerabilitytoexternaleconomicfactors.

y diversifybeyondoilandgastosecurelong-termsustainabledevelopment,tolessenrisks,andtopromotethetransitionprocessinotherkeyeconomicsectors

y reformpublicinstitutionsandcorporategovernancelegislation,strengthenthejudiciaryandensuretransparencyoftransactionsinordertoimprovethebusinessenvironmentandincreaseinvestorconfidence.

4Russia, Belarus, Kazakhstan, Turkmenistan, and Ukraine

AstheEBRDincreasinglyfocusesitseffortsonthetransitionchallengesfacingthecountriesfurthersouthandeastinitsregionofoperations,donorfundingisallthemorecriticalfordeliveringqualityprojects.

y Russiawasbyfarthelargestrecipientofdonorfundinginthisregionin2006,withcommitmentsreaching€9.7million,followedbyUkrainewith€6.7million.

y ElevencitiesintheregionbenefitedfromTCassignmentsin2006toimprovemunicipalservices,suchaswatersupply,publictransportanddistrictheating.

yInmoreregionsandsectorsthanever,micro,smallandmedium-sizedenterprisesreceivedpracticalsupportandadvice.

In2006donorsprovided

€20.3mforTCassignmentsinthisregion

Kazakhstan,RussiaandUkrainewerethelargestrecipients,accountingforover

€19m

42 Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine

Russia Belarus Kazakhstan Turkmenistan Ukraine Total

Financialinstitutions 1,999 – 697 122 1,534 4,352

Manufacturing 50 – – – – 50

Legaltransition 406 – 80 – – 486

Municipalandenvironmentalinfrastructure 2,259 – – – 754 3,013

Microfinance 3,158 590 904 – 1,456 6,108

Powerandenergy 165 – – – 2,097 2,262

TurnAroundManagementandBusinessAdvisoryServicesprogrammes 1,524 – 1,341 – 492 3,357

Transport – – 199 – 350 549

Other 98 – – – – 98

Total 9,659 590 3,221 122 6,683 20,275

Table 4.1TC commitments in 2006 by country and project category (€’000)

Chart 4.1TC commitments in Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine, in 2006 (€ million)

Russia Belarus Turkmenistan UkraineKazakhstan

Chart 4.2TC commitments in Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine, 2002–06 (€ million)

0402 05 0603

“JapanisnotonlythelargestTCcontributortotheETCFund,ithasalsobeenthelargestbilateraldonortotheEBRD’stechnicalassistanceprogrammesince2001.OursupportfocusesoneasternRussia,CentralAsiaandMongolia,andrangesfromhelpingentrepreneurstomunicipalinfrastructureprojects.”

KazuyaMurakami BoardDirectorforJapan,EBRD

In2006donorsprovidedabout€20.3millionforTCassignmentsinthisregion.Kazakhstan,RussiaandUkrainewerethelargestrecipients,accountingforover€19million.Thisfundingsupportedinvestmentsinmunicipalinfrastructure,energyandmicrofinance,andhelpedentrepreneursthroughtheTurnAroundManagement(TAM)andBusinessAdvisoryServices(BAS)programmes(seepage47).DonorfundsalsosupportedmicrofinanceactivitiesinBelarusandTurkmenistan.

TheEuropeanUnionwasthelargestdonorin2006,fundingmicrofinance,financialinstitutionandmunicipalinfrastructureassignments.Japanprovidedover€3million,whichincludedtechnicalassistancetomunicipalinfrastructureinvestmentsandtheTAMprogrammeinRussia,aswellassupportfortheBASprogrammeanddevelopmentofruralandagriculturallendinginKazakhstan.

TheRussiaSmallBusinessFund(RSBF)provided€3milliontofinancemicrolendingadvicetolocalbanks.FinlandhelpedfundtheTAMandBASprogrammes,andalsosupportedtheBank’sinvestmentsinmunicipalservicesinRussiaandUkraine.AustriaandSwedenbackedanenergyefficiencyprogrammeinUkrainewith€2milliontoprovidetechnicalexpertise.

FrancefinancedassignmentstoprepareandimplementinvestmentsinUkraine’swaste-watersector,andCanadafinancedapre-privatisation,institutionalreformprogrammewiththeKazakhStateAccumulationPensionFund.IrelandsupportedtheexpansionoftheBelarusSME/MSEFinanceFrameworkandregulatorydevelopmentoftheKazakhtelecommunicationssector.

Japanprovidedover

€3mwhichincludedtechnicalassistancetomunicipalinfrastructureinvestmentsandtheTAMprogrammeinRussia

CasestudyBASsuccessinruralKazakhstan

In2006theBASprogrammeconcludedaprojectinAktobeaimedatimprovingsheepherdmanagementatKoptogai,afarmlocated400kilometresfromtheKazakhcapital.Undertakenwiththehelpofalocalsheep-breedingconsultant,theprojectenabledtheintroductionofbetterfertilisationtechniquestosustainafasterandmorepredictableherdgrowthandenhancedtheoverallmanagementoftheherdandthefarm.

Inaddition,byusinglocalexpertise,theprojectachievedthedualaimsofassistingsmallenterprisesintheirbusinessexpansionandhelpinglocalBAS-accreditedconsultantstodeveloptheirskills.ThiswasthefirstinitiativeconductedbytheBASfacilityinCentralAsiainruralenterprises.ThepositiveresultshaveencouragedtheintroductionofasimilarruralBASprojectinhorseherdmanagement.TheprogrammeinKazakhstanisfundedbytheJapanesegovernment.

44 Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine

Door detail, Moscow court

Morethantwo-thirdsoftheTCfundingcommittedinthisregionin2006backedsmallandmedium-sizedenterprises(SMEs)withinvestmentsupportandadvisoryservices.Assignmentshelpinginfrastructureandenergyefficiencyinvestmentsaccountedformuchoftheremainder.

Micro and small enterprise lendingThousandsofmicroandsmallenterprises(MSEs)havealreadybenefitedfromloansprovidedbytheEBRD’spartnerbanks,microfinancebanksandotherfinancialinstitutionsthroughouttheregion.In2006theEBRDsoughttoextendtheregionalavailabilityoffinancing,torecruitmorepartnerinstitutionsandtopioneernewformsoflendingtoruralbusinessesandfarms.

TheKazakhstanSmallBusinessProgrammehas,todate,providedover150,000loans.WithTC

fundingfromJapanandtheUnitedStates,itisexpandingitslendingactivitieswithexistingandnewpartnerinstitutionstonewruralandagriculturalclientsoveratwo-yearperiod.ThiswillfocusinitiallyonsouthernKazakhstanbeforebeingextendedtoeasternandcentral/northernpartsofthecountry.

TheEBRD’smicrofinanceactivitiesarewellestablishedinmostRussianregions.TheexpansionoftheRSBFtosouthernRussiahashighlightedtheacuteneedforeconomicandsocialdevelopmentinthenorthCaucasus,whichisstillextremelypoorandsuffersfromcontinuedarmedconflictandlackofinvestment.In2006,withfinancefromtheEuropeanUnion,theBankconductedafeasibilitystudyonextendingitsreachtothenorthCaucasusregion.TheEuropeanUnionhasalsosetaside€3milliontosupportanMSElendingprogrammeinthisregion.

TheKazakhstanSmallBusinessProgrammehas,todate,providedover

150,000 loans

Financial sector developmentAkeyobjectiveinthisregionistosupportthedevelopmentofsoundbankingprinciples,includinghigh-qualityservicesforthecorporateandretailsectors,goodcorporategovernanceandtransparency.Astrongbankingsectorhasanimportantroletoplayinboostingtheprivatesector.

InTurkmenistantheEuropeanUnionhasfundedanextensionoftheLocalCreditAdvisorsProgramme,whichadvisesTurkmenBankabouttheon-lendingofEBRDcreditlinestosmallenterprises.TheRussianRegionalVentureFundsintheLowerVolgaregion(fundedbyUSAID)andinnorth-westernRussia(fundedbyFinland,NorwayandSweden)benefitedin2006fromTCfundingforprojectpreparationandduediligencefortheirequityinvestmentsinmedium-sizedcompanies.

Therehasbeenagrowingdemandfortradefinancetofacilitatetheinternationalandregionaldistributionofgoods.However,onlyalimitednumberofbanksintheregionarefamiliarwiththesetransactions,andmostdonothavetheskillsorknowledgenecessarytointroducesuchfinancialproducts.Donorfundingishelpingtoenhancetheavailabilityoftradefinancinginstruments.In2006,trainingandadvisoryassignmentswerefundedbyItalyandtheNetherlandsinRussiaandUkrainerespectively.Inaddition,TaiwanICDFsignedanagreementtoprovideUS$5million(€3.8million)forco-financingfortheBank’sTradeFacilitationProgrammetosupporttradeinAzerbaijan,RussiaandUkraine.

CasestudyImprovingRussiantramsandcuttingtransportpollution

ThecityofKrasnodarliesontheKubanriver,lessthan150kilometresfromboththeBlackandAzovseas.Itstramsareatleast20yearsold.Manylackbasiccomfortandsafetyfeaturesand15percentareundergoingrepairatanyonetime.TheEBRDisconsequentlyinvesting€10.4millioninthepurchaseof50newRussian-builttramstoservethecity’s800,000-strongpopulation,90percentofwhomusethetramandtrolleybussystem,whichemploysover3,500people.

“Thenewtramsuse30percentlesselectricityandtheyaremuchmorecomfortable,withmuchbetterconditionsforthedrivers,”saysAnatolyPanin,theDirectorofthemunicipallyownedKrasnodarPublicTransportCompanyforthelast17years.Thenewtramprojectaimstoencouragepeopletousepublic

transportratherthantheircars.Russia’spublictransportsystemasawholecarriesaround37billionpassengersayear,andthereare72citieswithtramnetworks–morethaninanyothercountry.

InKrasnodaralone,electrictransport(tramsandtrolleybuses)havea62percentmarketshareand,atsixroubles(lessthanoneeuro)perjourney,MrPaninconsidersthemtobeabargain.“Virtuallyfree!”Thecompanymakes€2millionamonthinfaresandanothermillioninadvertisingonthesidesoftramsandbannersstrungabovethestreets.

Donorfundingtotalling€610,000wasprovidedbyAustria,theEuropeanUnionandGermanytoassisttheKrasnodartransportcompanywithitspre-loaninvestmentplan,restructuringandprocurement.

InRussiatheEBRDhasinvested

€10m toimprovedistrictheatingandenergyefficiencyinthecityofUfa

4� Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine

“WearelookingforwardtoworkingwithRussiaandtheinternationalcommunityonglobalchallengessuchasclimatechangeandpovertyreduction,andtakingpartintheEBRD’sSustainableEnergyInitiativewillbeavitalpartofthisnewapproach.TheSEIhastremendouspotentialtomakealastingimpactontheregion.”

BillKilby DepartmentforInternational

Development,UnitedKingdom

TurnAround Management programme TheTAMprogrammehasworkedon296projectsintheregion.In2006itimplemented43projects.ThemaindonorshavebeenCanada,theEuropeanUnion,Finland,Ireland,JapanandSweden.Donorscontributedalmost€1.5milliontotheprogrammeinKazakhstan,RussiaandUkrainein2006.

WiththesupportofJapan,theprogrammehasimplementedenvironmentalprojectsinRussia.TheseincludeNovokom’swood-processingplantinVladivostok,whereTAMinvolvementhaspositivelyalteredthemanagement’sattitudetoenergyconservation,wastemanagementandqualitycontrolissues.

Business Advisory Services programmeTheBASprogrammeinKazakhstanhasbeenfundedbytheJapan-EuropeCooperationFund(JECF)andtheSwissStateSecretariatforEconomicAffairs(Seco).TodateithasprovidedpracticalbusinessadvicetoKazakhSMEsthrough412projects.Totalturnoveroftheassistedenterprises,whichtogetherhavemorethan46,000employees,amountstoover€1billion.During2006theBASprogrammeextendeditsoperationsintomoreremoteregionsofthecountry.

TheprogrammehasbeenactiveinRussiasinceJanuary2000,undertaking364projectsinfourmainregionsofthecountrybytheendof2006–101projectsinKaliningrad,142inStPetersburgandnorth-westernRussia,121inVladivostokandtheFarEastregion(includingKhabarovskandSakhalin)and34inSamara.TheenterprisesthathavereceivedBASassistanceemployover30,000workersandhaveanaggregateturnoverofalmost€786million.Japan,Finland,Luxembourg,NorwayandSwedenhavebeenthemainBASsupporters.

“Finlandhasactivelyparticipatedintechnicalassistanceandpartnershipfunds,includingtheETCFund,supportingprojectswherehelpismostneededwhileencouragingcountriesintransitiontotakeresponsibilityfortheirowndevelopment.”

PetriSalo MinistryofForeignAffairs,Finland

Other sectors

Municipal and environmental infrastructureTheEBRD’sinfrastructureoperationsaimtohelplocalauthoritiesimprovetheefficiencyandqualityoflocalservices.Withdonorsupport,theypromotesoundmanagementandinvestmentpracticeswithinamarket-orientedregulatoryframework.

InRussiatheEBRDhasinvested€10milliontoimprovedistrictheatingandenergyefficiencyinthecityofUfa,replacingoldheatingsub-stationswithmodernautomatedcontrolandregulationsystems.UfaisalsobenefitingfromaNorwegian-fundedassignmenttoprovidelong-termengineeringdesignandprocurementadvicetothecity.

4� Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine

OtherassignmentssupportingdistrictheatingprojectsinIrkutskandtheUkrainiancitiesofHarkivandYaltawerefundedbyFinland,JapanandDenmarkin2006.

Inthewatersupplyandwaste-watersectors,theEuropeanUnion,FinlandandFrancehavefinancedpreparatoryworkforinvestmentsinUkraineandtheRussianregions.UrbantransportinRussiahasalsobenefitedfromEUfunding(seecasestudyonpage46).

Inaddition,tofacilitateurbantransportprojectsintheSiberianandFarEastRussianregion,Japanapproveda€1millionframeworktosupportlocalgovernmentsandpublictransportcompaniescommittedtoimprovinglocalservices.

Japanapproveda

€1mframeworktosupportlocalgovernmentsandpublictransportcompaniescommittedtoimprovinglocalservices

CasestudyImprovingworkingconditionsformigrantlabourinRussia’sconstructionindustry

Launchedin2006,atechnicalcooperation(TC)projectisdevelopingacodeofconductfortheRussianconstructionindustrytopreventlabourexploitationandtopromotegoodlabourpractices.FundedbytheUKDepartmentforInternationalDevelopment,theprojectisbeingmanagedbytheEBRDincollaborationwiththeInternationalLabourOrganization(ILO).

WhilelinkedtoanexistingILOinitiativetocombathumantraffickingandforcedlabourintheKyrgyzRepublic,Russia,TajikistanandUzbekistan,theTCprojectspecificallytargetstheconstructionindustry.Thisisduetothelargenumbersofmigrantworkersemployedinthatsector,manyofwhomcomefromearlytransitioncountriesandmaybeparticularlyvulnerabletoabuse.Thisisamatterofsomeconcernforfinancialinstitutions,sinceconstructionschemesbackedbythemareexpectedtocomplywithcorelabourstandardsandnationallaw.

ConsultantsforthisprojectincludeexpertsfromtheAnalyticalCentreoftheRussianCoordinatingCouncilofEmployers’Unions(KSORR),theLevadaAnalyticalCentre,aswellasindependentadvisers.During2006

theconsultantsassessedexistinglabourpracticesandemployer,tradeunionandgovernmentattitudestowardsmigrantworkersintheconstructionindustryacrossseveralregionsofRussia.

Theirdraftreportsummarisedtheirfindingsanddiscussedtheintroductionofanindustrycodeofconducttopromotegoodlabourstandards.ThiswasconsideredinNovember2006byaworkshopofrepresentativesfromtheFederalServiceonEmployment,theFederalMigrationService,theMinistryofHealth,tradeunions,businessassociations(generalconstructionandroadconstruction),theassociationofrecruitmentagencies,theEBRDandtheILO.

Allweregenerallysupportiveoftheconceptofanindustrycode,withlaw-abidingcompaniesinparticularfavouringameanstodistinguishthemselvesfromrogueemployerswhosaveonlabourcoststhroughexploitation.Theprojectshouldbefinalisedlaterin2007withthepublicationofthefinalreport,endorsedbytheILO,theEBRDandKSORR.Thereportwillincludeamodelcodeandmonitoringsystemsuitableforadoptionatindustryassociationorenterpiselevel.

Cupola, Odessa

TheTAMprogrammehasworkedon

296 projectsintheregion

In2006itimplemented

43 projects.ThemaindonorshavebeenCanada,theEuropeanUnion,Finland,Ireland,JapanandSweden

�0 Russia, Belarus, Kazakhstan, Turkmenistan and Ukraine

“CanadaisastrongdonorsupporteroftheWomeninBusinessinitiative,establishedbytheTurnAroundManagementprogrammeinthesouthernCaucasus.Thisinitiativehashelpedinmanywaystoencouragetheentrepreneurialspiritandstrengthenwomen’seconomicempowermentinArmenia,AzerbaijanandGeorgia.”

CathyMains CanadianInternationalDevelopment

Agency(CIDA)

Donorscontributedalmost

€1.5m totheTAMprogrammeinKazakhstan,RussiaandUkrainein2006

��

“TheTaiwanBusinessFundhasbeenanactivedonortotheBank’scountriesofoperationssince1991.WearepleasedtocontinueoursupportthroughtheBank’sTradeFacilitationProgrammeineasternEurope,CentralAsiaandRussia.”

EdgarLin TaipeiChinaRepresentative

OfficeintheUnitedKingdom

EnergyRussia,KazakhstanandUkrainearetheEBRDregion’sthreelargestemittersofcarbondioxide.TheBankisplanningsignificantinvestmentstoaddressenergyinefficienciesthroughitsSustainableEnergyInitiative,whichwaslaunchedin2006.

SpainhasfundedanassignmenttoreviewtheregulatoryframeworkforinvestmentinwindfarmsinRussia.ThisiscloselyrelatedtotheEBRD’sstrategyforinvestmentsintherenewableenergysector.TheTCassignmentallowstheBanktoaddresstheurgentregulatoryandtechnicalissuesfacedbytheleadingwindpowerdevelopersinRussia.TheassignmentwillcontributetothedevelopmentoftheBank’scapacitytofinancerenewableenergyprojects.

ThereisgreatpotentialforimprovementinenergyefficiencyinUkraine.Energyintensity(theratioofprimaryenergytooutput)inUkraineisseveraltimeshigherthantheaverageintheEuropeanUnion(excludingthosecountriesthatjoinedin2004).Inaddition,theincreasedpriceofgasfollowingUkraine’sdisputewithRussiainearly2006affectedthefinancialperformanceofbusiness.

TheUkraineEnergyEfficiencyProgrammepromotesinvestmentincreditlinesfinancingenergyefficiencyandrenewableenergyprojectsintheindustrialandresidentialsectorsofthecountry(similartocreditlinesalreadyimplementedinBulgaria).AustriaandSwedenarefundingthetechnicalexpertisenecessaryforthesuccessfulimplementationoftheprogramme.Consultantsperformenergyauditingservicesandidentifyefficiencymeasurestobeimplementedbyindustrialclients.

Legal transitionEffective,efficientandtransparentinsolvencyproceduresarecriticaltothelong-termcommercialhealthofacountry.WithfinancefromSwitzerland,theEBRD’sLegalTransitionProgramme(LTP)hasinitiatedaprojecttohelpRussiaestablishaBankruptcyAuthoritytolicense,trainanddisciplinepractitionersandtosetstandardsandcodesofconduct.ThisprojectwillstrengthentheRussiangovernment’scapacitytoregulateinsolvencyadministrators.LTPconsultantsanda(Canadian-financed)insolvencyexpertareliaisingwiththeMinistryofEconomicDevelopmentinRussia,alongwithlocalfinancialinstitutions,lawfirms,insolvencypractitionersandacademics.

InvestmentclimateWhileRomaniaandBulgariahavemadesubstantialprogressinreforms,increasingpoliticalpressuresintherestoftheregionhave,attimes,sidetrackedcommitmenttothetransitionagenda.Nevertheless,theregionnowbenefitsfromlargerandmoresophisticatedfinancialmarkets.Accesstobankcreditandagrowingequitymarketcontinuetoprovidevaluablecapitalforenterprisefinancing.InflowofEUstructuralandcohesionfundswillalsoenhanceinfrastructurenetworksfortheEUmemberstates.

y invigorateanewphaseofreforms,particularlyingovernance,enterpriserestructuring,competitionpolicyandinfrastructure

y undertakefurtherreformofpublicadministrationandimprovecorporategovernancepracticestomakebetteruseofEUfundsandtoboostconfidenceinthebusinessenvironment.

�EU member states and Croatia

BulgariaandRomaniareceivedsubstantialdonorsupportin2006duringthelead-uptotheirfullmembershipoftheEuropeanUnionfrom1January2007.Croatia,anEUcandidatecountrysince2005,alsoreceiveddonorfinancetosupportitspreparationsforEUaccession.

��

y Donor-fundedassistancetotheEUmemberstatesandCroatiatotalled€13millionin2006.

y Publicsectorco-financingprovided€1.1billiontowardsEBRDprojects.

y Atotalof€9millioninTCgrantswasprovidedtoimproveaccesstocreditandleasingfacilitiesforsmallandmedium-sizedenterprises.

y Donorfundingcontributedtotheimprovementofmunicipalservicesbysupportingtheupgradingorconstructionofwaterandwaste-watertreatmentplants.

Project Bulgaria Croatia Hungary Lithuania Poland Romania Slovenia Regional Total

Smallbusinessfinance – – – – – – – 9,191 9,191

Infrastructure 231 300 – – 82 799 – – 1,413

Capacitybuilding 1 – – 210 – – 197 – 46 453

Transportandenergy 19 300 – – – 250 – – 569

TAM/BAS 60 42 1 13 – 1,299 19 – 1,434

Total 310 642 211 13 82 2,546 19 9,237 13,060

1ThisincludesPPPlegislation,BucharestStockExchangeinstitutionalreformandanti-money-launderinginitiatives.

€13mindonorfundingwaschannelledtothenewEUmemberstatesandCroatiain2006

UndertheEU/EBRDSMEFinanceFacility

€9mwascommittedtoincreasingaccesstocreditandleasingfacilitiesforSMEs

Table 5.1TC commitments in 2006 by country and project category (€’000)

�4 EU member states and Croatia

Chart 5.1TC commitments in EU member states and Croatia, 2002–06 (€ million)

0402 05 0603

“Economiccompetitivenessdependsheavilyonthecapacityofsmallbusinesses.Therefore,strengtheningsmallandmedium-sizedenterprisesisvitaltoensureincreasedcompetition.AnewmicrocreditfacilitythatcombinesfundsfromtheEU,theEBRDandtheRomaniangovernmentaimstohelpthesebusinessesgainaccesstoloans.”

AmbassadorDonatoChiarini DelegationoftheEuropeanCommission

inRomania,EuropeanCommission

In2006,€13millionindonorfundingwaschannelledtothenewEUmemberstates(includingBulgariaandRomania)andCroatia.UndertheEU/EBRDSMEFinanceFacility,€9millionwascommittedtoincreasingaccesstocreditandleasingfacilitiesforsmallandmedium-sizedenterprises.

Donorscontributedupto€1.4milliontomunicipalinfrastructureinvestments,over€450,000tolegaltransitionreformsandinstitutionalreforms,and€500,000tothetransportsector.Grantfundingworth€1.4millionsupportedtheTurnAroundManagement(TAM)andBusinessAdvisoryServices(BAS)programmes,whichprovidetechnicalandmanagementadvicetolocalbusinesses.

TheprincipaldonorswereAustria,theBalticTechnicalAssistanceFund(BTAF–supportedbyFinland,NorwayandSweden),theCentralEuropeanInitiative(CEI–fundedbyItaly),Denmark,theEuropeanUnion,Germany,Greece,Italy,Luxembourg,SpainandSwitzerland.

In2006theBankapproveda€250millionincreaseintheEU/EBRDSMEFinanceFacility.ThefacilityisextendingcreditlinestofinancialintermediariesincorporatedinBulgaria,RomaniaandCroatiaforon-lendingtosmallbusinesses.Thiswillbesupportedbya€24millioncontributionbytheEuropeanUnion.

Tohelpdevelopmunicipalandenvironmentalinfrastructure,donorfundinghassupportedprojectseligibleforco-financingundertheEUInstrumentforStructuralPoliciesforPre-accession(ISPA).InMay2006theEBRD,theEuropeanUnionandtheEuropeanInvestmentBank(EIB)signedaMemorandumofUnderstandingonJointAssistanceforPreparingProjectsinEuropeanRegions(JASPERS).Thisisatechnicalassistanceinitiativetopreparehigh-qualityprojectseligibleforEUstructuralandcohesionfundswithinthememberstates.

��

CasestudySupportingmicroandsmallbusinessesinCroatiaandRomania

In2006state-ownedHrvatskaPoštanskaBankabecamethefirstCroatianbanktojointheEU/EBRDSMEFinanceFacility,receivinga€10millionloanforon-lendingtosmallandmedium-sizedenterprises.Theloaniscomplementedbya€1.4milliongrantfromtheEuropeanUnionfortechnicalassistanceandperformance-basedfees.Sub-loansofupto€30,000willbemadeavailabletolocalcompanieswithfewerthan10employees,whilecompanieswithupto100employeeswillbeeligibleforloansofupto€125,000.

OpportunityMicro-CreditRomania(OMRO),basedinTarguMures,willbethefirstmicrofinanceinstitutiontoreceivefundingunderthenewRomaniaMicroCreditFacility(seepage57).OMRO’s€2.8millionloanwillenableittobuildonitsexistingportfolioofmicro-businessclients.Typicalsub-loanstomicroandsmallenterpriseswillbeunder€10,000andwilltargetbusinessesemployingninepeopleorfewer.

Lithuanian VerbaAVerbaisatraditionaldriedflowercompositiondatingbackover400years.ItwasbelievedthatahallowedVerbakeptathomecouldprotectthehouseagainstlightningstrikesandthefamilyfromdisease.

�� EU member states and Croatia

��

Micro and small enterprise lendingTheEU/EBRDSMEFinanceFacilityhasbeensupportingmicro,smallandmedium-sizedenterprises(MSMEs)since1999.ThefacilityisawellestablishedprovideroffundstoMSMEsthroughcommercialbanks,leasingcompaniesandequityfunds.Withafocusoninstitutionalreform,theSMEfacilityhasplayedakeyroleinthedevelopmentofSMEfinanceatparticipatingfinancialinstitutions.Sinceitsinception,thefacilityhassuccessfullyprovidedcreditlinesto34localbanksand32leasingcompaniesmanagingmorethan60,000transactionsworth€1.4billionandwithanaveragesub-loanof€23,100.

ToboostmicrofinanceinvestmentinRomania,theEBRD,theEuropeanUnionandtheRomaniangovernmentestablishedin2006the€88millionRomaniaMicroCreditFacilitytoprovideloanstolocalbanksandmicrofinanceinstitutionstoon-lendtomicroandsmallenterprises,includingforstart-upfunding.

Thenewfacilitywillbefinancedwith€40millionfromtheEBRD,€30millionfromthecommercialsyndicationmarket,€13.6millionfromtheEUPhareProgrammeand€4.4millionfromtheRomaniangovernment.TheEuropeanUnionandRomaniangovernmentwillprovide€2.5millionintechnicalassistancefunding.ThefacilitywillpromoteJEREMIE(JointEuropeanResourcesforMicrotoMediumEnterprises),anEUinitiativetoimprovethesupplyofriskcapitaltoSMEsintheEU.

TurnAround Management and Business Advisory Services programmes Since1993,theTAMandBASprogrammeshavebeenplayinganimportantroleinenhancingenterprisecompetitiveness.In2006technicalcooperationfundingworth€1.4millionhelpedimplementprogrammesinBulgaria,Croatia,Hungary,LithuaniaandRomania.Luxembourgcontributedover€160,000tothestart-upoffournewTAMprojectsinRomaniaandBulgaria,while

anewBASprogrammewasinitiatedinRomaniawithAustriansupport.GreekfundinghasimplementedaTAMprojectinCroatia,andotherTAMinitiativesinLithuaniaandHungaryhavebeenfinancedbytheBTAFandLuxembourg.

Inlate2005theBASprogrammephasedoutitsoperationsinSlovenia,havingcompleted203projectsoverfouryearsassistingenterpriseswithanaggregateturnoverofover€1.8billionand22,000employees.TheprogrammeiscontinuinginBulgariaandCroatia,havingundertaken244projectsintheformersince2001and262(fundedmainlybytheCEI)since2000inthelatter.Theassistedenterpriseshaveachievedanaggregateturnoverofmorethan€1.5billionwith38,000employees.

TAMandBAShavebothbeenextremelysuccessfulindevelopingtheexpertiseofenterprisesandinhelpingthemtomeetthechallengesofmarketeconomies.

In2006technicalcooperationfundingworth

€1.4m helpedimplementTAMandBASprogrammesinBulgaria,Croatia,Hungary,LithuaniaandRomania

Luxembourgcontributedover

€160,000 tothestart-upoffournewTAMprojectsinRomaniaandBulgaria

Other sectors

EnergyPromotingenergyefficiencyandtheprivatisationofstate-ownedenterprisesintheenergysectorisakeypriorityfortheEBRD.In2006theBlackSeaTradeandDevelopmentBankprovided€18millioninco-financingfortherestructuringoftheMaritzaPowerPlantinBulgaria.RestructuringoftheBelchatowPowerPlantinPolandwasco-financedbytheEIB(with€221million)andtheNordicInvestmentBank(€150million).

Municipal and environmental infrastructureDuring2006theEBRDcontinuedtosupportthecommercialisationofinfrastructurebysupportingprivatesectorinvolvementandusinggrantfinancingprovidedbytheEuropeanUnion,theEIB,theSwissgovernmentand(forthefirsttime)theEUCohesionFundfortheEUmemberstates.Technicalassistanceforinfrastructureprojectsreached€2millionin2006.

�� EU member states and Croatia

Denmarkissupportinga€46.8millionwatersupplyandwaste-waterinvestmentprogrammebenefitingaround260,000residentsinthecityofRousseandsurroundingmunicipalitiesinnorthernBulgaria.TheEuropeanUnionisexpectedtoprovide€35.1millioninISPAgrants,andtheEBRDhasprovidedan€8millionloan.

InCroatia,theEBRD-ItalyPrivateSectorDevelopmentFundfortheWesternBalkansissupportingtheimplementationofawaste-watertreatmentprojectinKarlovacwithISPAgrantco-financingof€22.5million.

InPoland,SpanishfundinghassupportedtheimplementationofadistrictheatingprojectinKrakov,whileinGdansktheEBRDandtheEUCohesionFundareco-financingthemodernisationofthewatersupplyandwaste-waterinfrastructuresystems(seecasestudyonpage59).

TransportInCroatia,GermanandItalianfinanceissupportingthedevelopmentoftherailwaysystemandtheportofDubrovnik,whiletheEBRDandtheEIBareco-financingthecompletionandupgradingoftheZagreb-Rijekamotorway(withloansof€50millionand€210millionrespectively).TheEIBhasalsoprovided€200millioninco-financingformotorwaybuildinginHungary.InRomania,theCEIhassupportedtheimplementationofanurbantransportprojectinBrasov.Spainhasdevelopedaparkingstrategyforthecapital,Bucharest,andSwitzerlandhasfundedapublictransportprogrammeinIaisi.GermanfundingishelpingtostrengthenRomania’srailwaypassengermanagementsystem.

Legal and institutional reform In2006,Spainfinancedalegaltransitionprojecttoenhancelegislationonpublic-privatepartnershipsinHungary,andAustrianfundingimprovedderivatives-tradingskillsattheBuchareststockexchangeinRomania.Meanwhile,Switzerlandfinancedanti-money-launderingseminarsintheregion.

In2006,theBlackSeaTradeandDevelopmentBankprovided

€18m inco-financingfortherestructuringoftheMaritzaPowerPlantinBulgaria

Technicalassistanceforinfrastructureprojectsreached

CasestudyInnovativesupportforinfrastructureinGdansk,Poland

With400,000inhabitants,GdanskisthebiggestcityinnorthernPoland.Itsgrowingpopulationmeansitneedstoupgradeandexpanditswaste-watertreatmentfacilities.

TogetherwiththeEUCohesionFund,theEBRDisco-financingthemodernisationofthecity’swatersupplyandwaste-waterinfrastructureincompliancewithEUdirectives.WhiletheBankislending€12milliontothenewlyformedGdanskWaterInfrastructureCompany(GIWK),theEUCohesionFundiscovering75percentofthetotalprojectcostsof€133million.

Thisinnovativearrangement,involvingaprivatesectoroperatorandanewlycreatedassetholdingcompany,isofparticularrelevancetowatercompaniesinothernewEUmemberstateswhererestructuringofthewatersectorisstillongoing.Consideringthatalmostallwaterinvestmentinthe

accessioncountrieswillbefundedfromEUgrantsourcesoverthecomingyears,thisprojectwillalsoprovideamodelonhowtoextendthebenefitsofgrantfinancingtoapublicsectorentityininvestmentswherethereisalsoaprivateoperator.SuchaninvestmentwillalsohaveapositiveenvironmentalimpactontheBalticSeabyreducingthelevelsofpollutants(includingphosphorusandnitrogen)dischargedintotheBalticSeafromthecityarea,improvingthequalityofthebathingwater,andachievingfullsecurityofwatersupplyforconsumers.

TheEBRD’sabilitytoprovideloanswithoutasovereignormunicipalguaranteewillallowcityauthoritiestousetheirborrowingcapacitytofinanceotherurgentinvestmentsinthenearfuture.Itwillalsofacilitateprivatesectorinvolvement,improveefficiencyandreducerisk,demonstratinghowpublic-privatepartnershipscanco-existwithEUgrantfunding.

Slovenian painted beehive front boardThetraditionofpaintingfrontboardsofbeehivesdatesfromthefirsthalfofthe18thcenturytotheendofthe19thcentury.Over3,000originalboardsareinmuseumsandprivatecollections,theoldestdated1758.

Annex1:Donoragreementsandreplenishmentsin2006

Donor Fundorproject €’000

Austria UkraineEnergyEfficiencyProgramme 1,000

WesternBalkansFund 1 2,000

BASTechnicalAssistanceCooperationFund 1,200

AustrianTechnicalAssistanceCooperationFund 1,000

BritishPetroleum(BP) EBRD/BPExplorationandDevelopment 863

Canada EBRD-CIDACanadaFund 5,300

EarlyTransitionCountriesFund 2 645

WesternBalkansFund 1 500

Clientbanks FinancialSectorTechnicalAssistanceFundfortheGeorgiaSMECreditLineProject 7.6

CzechRepublic WesternBalkansFund 1 500

EuropeanUnion Co-investmentfunding–waterresources 7,000

EU-EBRDPro-BiodiversityBusiness 600

TurnAroundManagementProgramme(FYRMacedonia) 700

TurnAroundManagementandBusinessAdvisoryServicesprogrammes(Montenegro) 1,200

TurnAroundManagementProgramme(Serbia) 4,000

EnergyefficiencyinvestmentsinUkraineandMoldova 9,500

Engurihydropowerplantupgrade(phaseII,unit4) 1,567

RomaniaMicroCreditFacility 2,500

MunicipalInvestmentSupportProgramme(MISPII) 1,025

UkraineMicroLendingProgramme–RegionalExpansion 1,000

Smallandmedium-sizedbusinesses(EU) 1,500

RussianRegionalBankInstitutionprogramme 1,333

PreparatoryActionCooperationFund 2,000

EuropeanCommunity–MunicipalFinanceFacility 2,100

Finland NorthernDimensionEnvironmentalPartnershipSupport 3 6,000

FinnishMinistryofTradeandIndustryTechnicalCooperationFund 820

FinnishTechnicalAssistanceCooperationFund 1,500

Germany GermanyIITechnicalCooperationFund 400

Greece HellenicRepublicTechnicalCooperationFund 1,000

Ireland IrelandTechnicalCooperationFund 250

EarlyTransitionCountriesFund 2 250

Italy AlbaniaWaterProject 860

Japan TheJapan-EuropeCooperationFund 777

Luxembourg ProjectPreparationCommitteeOfficer 77

LuxembourgTechnicalCooperationFund 200

Netherlands DutchEnvironmentCooperationFundforCentralandEasternEurope 100

EarlyTransitionCountriesFund 2 7,000

EBRD/NetherlandsGrainWarehouseFundforUkraine 500

NetherlandsTechnicalAssistanceCooperationFundforCentralandEasternEurope 500

Norway NorwayTechnicalCooperationFund 400

NorthernDimensionEnvironmentalPartnershipSupportFund 3 243

Poland WesternBalkansFund 1 500

SlovakRepublic WesternBalkansFund 1 500

Slovenia WesternBalkansFund 1 500

Spain EarlyTransitionCountriesFund 2 3,000

SpainTechnicalCooperationFund 3,000

WesternBalkansFund 1 1,500

Sweden Potimunicipalwaterproject 1,536

Kutaisimunicipalwaterproject 2,868

RussiaSurvey 100

MunicipalEnvironmentalFundforETCcountries 3,238

TechnicalCooperationFund 897

SustainableMunicipalTechnicalCooperationFund 2,212

SwedishTechnicalCooperationFund–PhaseII 1,087

Switzerland Districtheatingproject(Romania) 7,000

TaipeiChina TechnicalCooperationFund 1,139

UnitedKingdom WesternBalkansFund 1 4,451

UnitedStates MillenniumChallengeCorporation–Potimunicipalwaterproject 4,343

USAdvisorsFund 58

KazakhstanSmallBusinessProgramme(USAID) 40

Total 112,6371 Western Balkans Fund –Austria,Canada,CzechRepublic,Finland,Ireland,Luxembourg,theNetherlands,Norway,Poland,SlovakRepublic,Slovenia,Spain,SwedenandtheUnitedKingdom.2 Early Transition Countries Fund – Canada,Finland,Ireland,Japan,Luxembourg,theNetherlands,Norway,Spain,Sweden,Switzerland,TaipeiChinaandtheUnitedKingdom.3 Northern Dimension Environmental Partnership –Belgium,Canada,Denmark,theEuropeanUnion,Finland,France,Germany,theNetherlands,Norway,Russia,SwedenandtheUnitedKingdom.

Annex2:TCcommitmentsin2006,bydonor

��

Donor €

EuropeanUnion 20,696,126

EarlyTransitionCountriesFund 1 15,492,360

Italy 5,737,264

Japan 5,212,293

UnitedStates 3,264,592

RussiaSmallBusinessFund 2 3,037,667

Canada 2,836,858

Austria 2,687,007

Sweden 1,996,513

Finland 1,471,686

Switzerland 1,436,131

France 1,288,760

Norway 1,250,000

Netherlands 1,200,000

UnitedKingdom 1,103,130

Spain 1,073,110

MongolianCooperationFund 3 839,561

Luxembourg 816,719

NWRussiaRegionalVentureFund 4 683,475

Denmark 499,855

Germany 400,000

Ireland 256,829

TaipeiChina 248,087

Greece 202,300

GlobalEnvironmentFacility 5 18,788

BalticTechnicalAssistanceFund 6 13,885

Total 73,762,9971 Early Transition Countries Fund – Canada,Finland,Ireland,Japan,Luxembourg,theNetherlands,Norway,Spain,Sweden,Switzerland,TaipeiChinaandtheUnitedKingdom.2 Russia Small Business Fund –G7countriesandSwitzerland.3 Mongolian Cooperation Fund –Japan,Luxembourg,theNetherlandsandTaipeiChina.4 NW Russia Regional Venture Fund –Finland,NorwayandSweden.5 Global Environment Facility –multi-donor.6 Baltic Technical Assistance Fund –Finland,NorwayandSweden.

Abbreviations BAS BusinessAdvisoryServicesBTAF BalticTechnicalAssistanceFundCDM CleanDevelopmentMechanismCEI CentralEuropeanInitiativeCFF CafesjianFamilyFoundationCIDA CanadianInternationalDevelopmentAgencyCIS CommonwealthofIndependentStatesDEG DeutscheEntwicklungsGesellschaftDFID DepartmentforInternationalDevelopmentDIF DirectInvestmentFacilityDLF DirectLendingFacilityEAR EuropeanAgencyforReconstructionEBRD, the Bank EuropeanBankforReconstructionandDevelopmentEIB EuropeanInvestmentBankETC EarlytransitioncountriesEU EuropeanUnionFMO NetherlandsDevelopmentFinanceCompanyIFC InternationalFinanceCorporationIFI InternationalfinancialinstitutionILO InternationalLabourOrganizationISPA InstrumentforStructuralPoliciesforPre-accessionJASPERS JointAssistanceforPreparingProjectsinEuropeanRegionsJECF Japan-EuropeCooperationFundJEREMIE JointEuropeanResourcesforMicrotoMediumEnterprisesKAFC KyrgyzAgriculturalFinanceCorporationKfW KreditanstaltfürWiederaufbauKIDSF KozloduyInternationalDecommissioningSupportFundKSORR AnalyticalCentreoftheRussianCoordinatingCouncilofEmployers’UnionsMCC USMillenniumChallengeCorporationMCF MongolianCooperationFundMCFF Medium-sizedCo-FinancingFacilityMEI municipalandenvironmentalinfrastructureMSEs microandsmallenterprisesMSMEs micro,smallandmedium-sizedenterprisesNDEP NorthernDimensionEnvironmentalPartnershipOMRO OpportunityMicro-CreditRomaniaPPC ProjectPreparationCommitteePPP public-privatepartnershipREBIS RegionalBalkansInfrastructureStudyRSBF RussiaSmallBusinessFundRVF RegionalVentureFundSeco SwissStateSecretariatforEconomicAffairsSEI SustainableEnergyInitiativeSida SwedishInternationalDevelopmentCooperationAgencySMEs smallandmedium-sizedenterprisesTaiwanICDF InternationalCooperationDevelopmentFundofTaipeiChinaTAM TurnAroundManagementTC technicalcooperationTCFP TechnicalCooperationFundsProgrammeTFP TradeFacilitationProgrammeUSTDA UnitedStatesTradeandDevelopmentAgency

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Glossaryofterms

��

Micro, small and medium-sized enterprises Amicroenterpriseisdefinedasacompanywith20orfeweremployees;asmallenterpriseisacompanywith100orfeweremployees;andamedium-sizedenterpriseisonewith250orfeweremployees.

The EBRD’s countries of operations Albania,Armenia,Azerbaijan,Belarus,BosniaandHerzegovina,Bulgaria,Croatia,CzechRepublic,Estonia,FormerYugoslavRepublicofMacedonia,Georgia,Hungary,Kazakhstan,KyrgyzRepublic,Latvia,Lithuania,Moldova,Mongolia,Montenegro,Poland,Romania,Russia,Serbia,SlovakRepublic,Slovenia,Tajikistan,Turkmenistan,Ukraine,Uzbekistan.

Country groupingsCommonwealth of Independent StatesArmenia,Azerbaijan,Belarus,Georgia,Kazakhstan,KyrgyzRepublic,Moldova,Russia,Tajikistan,Turkmenistan,Ukraine,Uzbekistan.

Early transition countriesArmenia,Azerbaijan,Georgia,KyrgyzRepublic,Moldova,Mongolia,Tajikistan,Uzbekistan.

EU candidate countriesCroatia.WhileFYRMacedoniabecameanEUcandidatecountryattheendof2005,forthepurposesofthisreportitisincludedintheWesternBalkans.

EU member statesBulgaria,CzechRepublic,Estonia,Hungary,Latvia,Lithuania,Poland,Romania,SlovakRepublic,Slovenia.

G7Canada,France,Germany,Italy,Japan,UnitedKingdom,UnitedStates.

G8G7countries,Russia.

Western BalkansAlbania,BosniaandHerzegovina,FYRMacedonia,MontenegroandSerbia.

Donor Report Management Horst ReichenbachVicePresidency,RiskManagement,HumanResourcesandNuclearSafety

Gary BondOfficialCo-financingUnit

Marta Simonetti-WhitfordOfficialCo-financingUnit/CEI

ContributorsRimanteAdamonieneLisaAitkenNatashaAlexandrovaIrenaArluckAleksandraArsikJunkoAyaAllysonBaileySueBarrettMichaelaBergmanRaffaeleBoldracchiGaryBondCarolineBryantCarmenCanoAnneMariaCroninChrisCviicCraigDaviesKateDunnOliElseEvgeniaEvstegneevaEnginGoksuJaakkoHenttonenRenataIksarRichardJones

IvanJovanovskiJaneKieranChikakoKunoTatjanaKraljicThomasMaierEwaManikNeilMcKainJohnMcPheePaulMoffattKenjiNakazawaMichelNussbaumerOliviaOddiGvantsaOmiadzeAndreaPanskaGanaPetersenFernandPillonelMikeRandPeterSanfeyAlkeSchmidtMartaSimonetti-WhitfordZeljkaSomunMarjolaXhunga

Production RichardBateRichardGermanHannahGoodmanAnthonyMartinJonPageHelenWarren

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Design: RadiatePrintedinEnglandbyFulmarusingenvironmentalwasteandpaperrecyclingprogrammes.PrintedonHannoartsilk,anenvironmentallyresponsiblepaperwhichis100%TCF(TotallyChlorineFree).

6889 EBRD Donor Report 2007

PhotographyPhotographer PageAleksandarAndjic 5left,28-29,33bottomRichardBate 8,15bottom,19,20,23,48,50,59bottomBASKazakhstan 44bottomDavidCooper 4leftM.Crozet/ILO 49bottomSueCunningham 52-53DepartmentforInternationalDevelopment 47LukeDistelhorst 21EBRD 15topright,33toprightMikeEllis 5middle,40-41,46,56bottomEuropeanCommission 55RenatoFranceschin 36RobertHackman 34NozimKalandarov 10IbKatznelson cover,6-7ZavenKhackikian 26AndyLane 1,24,43OfficeofthePrimeMinisterofLuxembourg 27YuriNesterov 44topleftJonPage 51VladimirPirogov 4right,16-17,22bottom,25bottomArnheldeSerra 5right,12,31,35,39MartaSimonetti-Whitford 37,38HelenWarren 49topright

AdditionalphotographybyRadiateDesign

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EBRD Donor Report 2007 Making change happen · EBRD Donor Report 2007. 1 Message from the President...

Documents

APPROACH PAPER EBRD Energy Sector Strategy (2014- 2018 ... · 1.3 Scope The ESS covers the time-frame 2014-2018 and sets EBRD’s general direction and identifies how it will prioritise

AICEP BUSINESS OPPORTUNITIES SEMINAR – EBRD Lisbon, 22 …portugalglobal.pt/PT/Internacionalizar... · • Environmental, social, health and safety improvement • Facilitate donor

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DONOR REPORT 2012 Publications - [EBRD] · 2012. 5. 10. · 04 | EBRD | DONOR REPORT 2012 President’s message The 20th anniversary of the European Bank for Reconstruction and Development

EBRD in Greece · The EBRD’s envisaged priorities in Greece 15 September, 2016 7 • Support the resurgence and enhance the resilience of the private sector through a shift to a

Director Jan Jackholt (EBRD) - EBRD and Procurement

The EBRD in Jordan€¦ · What are the EBRD’s objectives? •To foster transition to market economies by investing mainly in the private sector, in particular small and medium

EBRD’s role

ATLANTIC GRUPA - ebrd. · PDF fileATLANTIC GRUPA Company of Added Value . EBRD’s 15th ANNUAL SYNDICATIONS AND CO-FINANCIERS MEETING . March 2013

European Bank for Reconstruction and Development Donor ...Donor Report 2011 Supporting investment Donor Report 2011 The EBRD is an international financial institution that supports

November 2016 EBRD EVALUATION DEPARTMENT · EvD Special Study – The EBRD’s experience with resident offices 7 2. The EBRD’s resident office system No EBRD guiding policy The

The EBRD in Romania - Romanian Public Relations Case Study – Greenfield Debt Financing EBRD’s activities EBRD in Romania Financing instruments Selected Investments Contact 21 Geographic

Performance of EBRD Private Equity Funds Portfolio to 31st … · 2013-03-19 · EBRD in Private Equity EBRD’s portfolio of funds: 20 years of investing in the asset class • 137

Japan and the EBRD · EBRD’s region. Support for this region is significant, compared with total TCFP commitments. More than half of TC assignments in 2005 supported projects in

EBRD’s Health-Focused Interventions

Environmental and Social Policy - ebrd.com · EBRD Environmental and Social Policy 01 A. Purpose of this Policy 01 B. The EBRD’s commitments C. Integrating environmental and social

SUSTAINABILITY REPORT 2011 - European Bank for ...2011 EBRD SUSTAINABILITY AWARDS The 2011 Sustainability Awards took place at the EBRD’s Annual meeting in Astana, Kazakhstan. As

EBRD and Power Generation Efficiency in Russia ... · –EBRD’s sustainable energy investments to €6.6 billion, for total project value of €35 billion in 369 projects in 29

EBRD in Greece · transactions undertaken by participating banks (issuing banks) in the EBRD’s countries of operations. • The Advice for Small Businesses (ASB) programme provides

EBRD Project Complaint Mechanism...issues with the project sponsor (the EBRD’s client). 1 A project is classified as Category A when it could result in potentially significant and