Saturday May 16, 04:52 PM
EBRD seeks to guide ex-Soviet bloc to recovery
By Roland Jackson
LONDON (AFP) - The European Bank for Reconstruction and Development met Saturday to discuss guiding crisis-hit eastern Europe to recovery and preventing a reversal of 20 years of hard-won economic reforms.
The EBRD, created in 1991 to help former communist nations adopt market economies after the collapse of the USSR, is holding the second and final day of the group's annual meeting in London.
"Today we have the task to sustain the promise of 20 years ago, the enormous achievements in the intervening 20 years sometimes might be underestimated," EBRD President Thomas Mirow said in closing comments to the board of governors.
"With common efforts, I trust we can make sure that the future of our region will look as prosperous and successful as people had been longing for."
The global financial crisis which erupted in late 2007 has ravaged economies in central and eastern Europe, largely because many of the countries had relied heavily on foreign debt or high commodity prices.
The bank had kicked off its two-day meet Friday by revealing it would invest a record 7.0 billion euros (9.4 billion dollars) into the embattled region by the end of 2009.
So far this year, it has ploughed a total of 2.3 billion euros, which is double the amount invested in the same period of 2008.
Some of the EBRD's 61 shareholder governments are calling for an increase in capital as it seeks to fund more banks and businesses in countries that are struggling to deal with the stubborn crisis.
Mirow added: "In the coming month we will have a mid-term review of the bank's crisis response to help establish what more the bank can do and how it can coordinate better with other financial actors."
The bank's investment zone -- 30 economies which stretch from central Europe to central Asia -- is forecast to shrink by a collective 5.2 percent this year before returning to growth of 1.4 percent in 2010, according to the EBRD.
"In these difficult times, the bank's shareholders have a reliable instrument to help the countries of our region in tackling the consequences of the crisis and building a more sustainable future," added Irish finance minister Brian Lenihan, who is also EBRD chair of the board of governors.
Mirow, appointed at the last meeting in Kiev in 2008, added that there was a need to assess the region's needs in terms of the transition mandate.
"I would suggest that we do so as soon as the crisis will be over, not before, and that we do so when were are sure that the recovery really takes place," he added.
Australia confirmed it would remain a member of the EBRD to help fight the sharp economic downturn, after previously saying it would depart in 2010.
The EBRD, owned by 61 governments, the European Commission and the European Investment Bank, posted a record annual loss of 602 million euros for 2008 as a result of the worst global slump since the 1930s.
The London meet comes one month after the Group of 20 summit, where world leaders agreed that 1.1 trillion dollars would go to the International Monetary Fund and other institutions to fight global economic turmoil.
The first day of the EBRD meeting on Friday was overshadowed by news that the recession-hit eurozone economy shrank by a record 2.5 percent in the first three months of the year, the deepest slump ever going back to 1995.
Germany -- a key exporter to central and eastern Europe -- also recorded its worst performance since modern records began in 1970 with a contraction of 3.8 percent in the first quarter.
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