LONDON, May 15 – The European Bank for Reconstruction and Development is investing billions of euros in central and Eastern Europe to help free the ex-Soviet bloc from deep recession, it announced here on Friday.
Kicking off its annual meeting, the EBRD said it had invested 2.3 billion euros (3.1 billion dollars) across the region so far this year and aims to invest a record 7.0 billion euros by the end of 2009.
Formed in 1991 to aid the transition of former communist nations to market economies, the EBRD invests across 30 countries including Estonia, Latvia, Hungary and Russia.
"The EBRD is setting a rapid pace of investment, responding to the impact of the global financial crisis on eastern Europe," the bank said in a statement.
"By the end of the annual meeting (Saturday), commitments will have reached 2.3 billion euros, up more than 50 percent from the same stage last year."
Bank governors, leading business officials and policymakers have convened in London to discuss battling a global recession which has slammed the EBRD\’s investment zone.
The economies of central and eastern Europe are to shrink by a collective 5.2 percent this year before staging a slight recovery with growth of 1.4 percent in 2010, according to EBRD forecasts.
However the economic risks from the current global slump are "no bigger" for eastern Europe than for other emerging countries, IMF chief Dominique Strauss-Kahn said on Friday as data showed that much of the region is in recession.
"There is certainly some risk in eastern Europe, as for every emerging market," the head of the International Monetary Fund told a news conference in the Austrian capital.
"Emerging markets relied a lot during the last decade on inflow of (foreign) capital and that inflow has dried up," Strauss-Kahn said.
In London, the EBRD\’s chief economist Erik Berglof told conference delegates that the crucial issue of financial landscape had topped the agenda.
"The issue of global financial architecture has been catapulted to the top of the agenda, particularly in the region that the EBRD is operating," said Berglof.
"There was so much missing in the architecture when we were hit by the crisis."
The London gathering, billed as "Investing In The Future: Opportunities in a Tougher Climate," will also be addressed by EBRD President Thomas Mirow and Irish Finance Minister Brian Lenihan — who is chairman of the bank\’s board of governors.
Addressing delegates Friday, Bank of England policymaker Tim Besley said "the big role for the EBRD is preventing the reversal of the past 20 years" during which time it has helped to achieve economic and political reforms in ex-Communist nations.
The EBRD, owned by 61 governments as well as the European Commission and the European Investment Bank, helps finance and recapitalise banks and businesses across the former Soviet bloc.
The London-based bank posted a record annual loss of 602 million euros (769 million dollars) for 2008.