EBRD craves new blood

EBRD is ready for a new capitalization

In brief: The Bank has decided to go for additional capitalization, the problems of the euro area does not become a financial giant obstacle.

Shareholders of the European Bank for Reconstruction and Development (EBRD) decided to increase the bank’s capital by 50% and thus pave the way for increased investment in the Bank over the next 5 years. According to the official documents of the Bank, this decision was made against the most serious a recession in the regional economy since the “fall of communism.” Board of Directors approved an increase in bank capital in the context of full compliance with the EBRD’s strategy for the period 2011-2015.

Thus the bank’s capital will grow from 20 billion euros to 30 billion euros through a temporary increase in reserve of capital of 9 billion euros and the transfer from reserves to paid-up equity interest in the amount of 1 billion euro. Now the chief economist of the EBRD Eric Berglof expressed the view that the debt crisis of the eurozone countries (such as Greece, Portugal and Spain) have a negative impact on the economies of developing countries in Eastern and Central Europe, dependent on exports to Western European countries. “Measures taken by the Governments of Western countries, such as fiscal constraints, such as weakening demand in these countries, which in turn affects the economy of the Eastern European region, is extremely dependent on exports to the eurozone,” – said the representative of the EBRD. According to E. Berglof, the negative impact of the debt crisis of the eurozone countries will have an impact on the revision of the forecast for growth in gross domestic product (GDP) of developing countries in Europe for 2010. EBRD forecast will be published on May 15 this year. In the February survey by the countries of Eastern and Central Europe and Central Asia, the Bank indicated that in general the surveyed region (30 countries), the EBRD expects average growth in 2010. 3,3% – after falling 6.1% in 2009. and compared with the October estimate of 2.5% growth. Improved prognosis due to “stronger-than-expected rates of four major economies of the region – Poland, Turkey, Russia and Kazakhstan through increased cost of commodities and the resumption of capital flows to major emerging markets.”

In February of this year The Bank raised its estimate for GDP growth of the Russian Federation up to 3,9% compared with 3.1% growth projected in October last year. According to the February forecast, in 2010. Russia’s GDP growth will be, analysts said the Bank already 4,2%. However, in early May this year The EBRD said that the outlook revision to GDP growth, Russia in 2010. upwards. In addition, the Bank noted that the increase forecast for GDP growth in countries such as Turkey and possibly Poland. Today the EBRD’s chief economist said that the previous forecast of GDP growth, the Eastern European region have been too optimistic. “Our previous forecast was very optimistic, but the external economic risks clearly have an impact on our future outlook for GDP growth in Eastern and Central Europe in 2010.”, – Said E. Berglof. Earlier in May, the Bank warned that the economies of Bulgaria, Romania and Serbia could be affected by the debt crisis that broke out in Greece, since a broad-Greek banking sector in these countries. The EBRD is an international financial institution that finances projects in 29 countries from Central Europe to Central Asia. The databank was to support the transitional economies of the former communist bloc. The owners of the EBRD are 61 countries and two international organizations. The bank was established in 1991. and during this time in partnership with private and public institutions to invest in the region, nearly 150 billion euros, of which over 47 billion euros – on their own.

Ukrainian Globalist
2010-05-16 14:10, Economics.

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