European Bank for Reconstruction and Development
EBRD headquarters in London
|Type||International financial institution|
|Sir Suma Chakrabarti|
The European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies. Initially focused on the countries of the former Eastern Bloc it expanded to support development in 30 countries from central Europe to central Asia. Besides Europe, member countries of the EBRD are from all 5 continents (North America, Africa, Asia and Australia see below), with the biggest shareholder being the United States, so the name is somewhat of a misnomer. Headquartered in London, the EBRD is owned by 65 countries and two EU institutions. Despite its public sector shareholders, it invests mainly in private enterprises, together with commercial partners.
The EBRD is not to be confused with the European Investment Bank (EIB), which is owned by EU member states and is used to support EU policy. EBRD is also distinct from the Council of Europe Development Bank (CEB).
The EBRD was founded in April 1991 during the dissolution of the Soviet Union by representatives of 40 nations from 3 continents and two European institutions, the European Investment Bank (EIB) and, after reaching agreement on the bank's charter, size, and distribution of power among shareholders.
In 2006, EBRD stated it would cease spending in the Baltic and central European nations by 2010, and would shift funding to Russia, Ukraine, Armenia, Kazakhstan and Uzbekistan. In 2010, due to the Great Recession, this process was postponed until 2015.[page needed]
The EBRD was founded to support countries of the former Eastern Bloc in the process of establishing their private sectors. To that end, it offers "project financing" for banks, industries and businesses, for new ventures or existing companies. It works with publicly owned companies to support their privatization, as advocated by the WTO since the 1980s  and "improvement of municipal services".
The EBRD mandates to work only in countries that are "committed to democratic principles". It promotes "environmentally sound and sustainable development", and does not finance "defense-related activities, the tobacco industry, selected alcoholic products, substances banned by international law and stand-alone gambling facilities".
Some NGOs have criticized the EBRD for financing projects they consider to be environmentally and socially harmful. Although it has increased its investments into energy efficiency and sustainable energy in recent years, these NGOs consider the bank continues to diminish the impacts of green investments by financing carbon-intensive development such as coal, oil and gas production, transportation and generation, motorways, and airports. Among the contested projects are the Ombla power plant in Croatia, the Kumtor Gold Mine in Kyrgyzstan, and the Šoštanj lignite power plant in Slovenia.
NGOs have criticized the EBRD on the lack of progress the EBRD makes in its main mission, the “transition towards open and democratic market economies.” For example, the EBRD reported that 67% of the people in its countries of operation indicated that corruption was the same or worse in 2006 compared to 1989.
2014 sanctions against Russia
The EBRD announced on 23 July 2014 that it would suspend new investment projects in Russia, following an earlier declaration by the European Council. The European Council declaration was made in the context of the 2014 pro-Russian unrest in Ukraine. As of 2014[update] Russia has been the biggest funding recipient of all countries. In 2013, the Russian Federation received 1.8 billion € for investments from the EBRD and 1 billion € from the EIB. Russia employed the funds to finance a variety of projects like pipeline valves, property acquisitions, and a loan to a hypermarket chain. Two Russian projects were awaiting funding from the EBRD: a 300 million € plan for promoting energy efficiency, and a $180 million loan to lease agricultural and forestry equipment. The bank stated that it will continue to manage on-going projects in Russia.
In 2015, the EBRD invested a record amount in the Central Asian region. The total investment in 2015 rose by 75% reaching €1,402.3 billion. Kazakhstan reported the largest total volumes of investment.reaching 790 million euro in 2015.
- Jacques Attali (1991-1993)
- Jacques de Larosière (1993-1998)
- Horst Köhler (1998–2000)
- Jean Lemierre (2000-2008)
- Thomas Mirow (2008–2012)
- Suma Chakrabarti (2012– present)
Recipient countries of investments
The following countries are recipients of funds: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Estonia, Georgia, Hungary, Jordan, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova, Mongolia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan.
After the Arab Spring, the EBRD added four countries in the Middle East and North Africa region to a special multi-donor account: Egypt, Jordan, Morocco, and Tunisia. These countries were expected to become full recipient countries in the future.
The following countries contribute in financing the EBRD: Australia, Austria, Belgium, Canada, China, Cyprus, Czech Republic (receiving member until 2007-12-31), Denmark, Egypt, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America as well as the European Community and the European Investment Bank
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The EBRD offers loan and equity finance, guarantees, leasing facilities, trade finance, and professional development through support programs. Direct investments range from €5 million to €230 million. Smaller projects are financed both directly by the EBRD and through "financial intermediaries". The EBRD website states it has helped finance over 1 million smaller projects by supporting local commercial banks, micro-business banks, equity funds and leasing facilities.
To be eligible for EBRD funding, "a project must be located in an EBRD country of operations, have strong commercial prospects, involve significant equity contributions in-cash or in-kind from the project sponsor, benefit the local economy and help develop the private sector and satisfy banking and environmental standards."
The EBRD finances projects in sectors including agribusiness, energy efficiency, financial institutions, manufacturing, municipal infrastructure, also known as public works (which includes transport, schools, water supply, waste disposal, and pollution control services), natural resources, power and energy, property, telecommunications, tourism, transport, information technology.
Since its founding in 1991, so far only the Czech Republic has graduated from borrower to shareholder within EBRD, in 2007.
- Development Finance Institution
- Green Climate Fund
- Sustainable development
- Irakli Kovzanadze, chairman of the Task Force on corporate governance of banks in Eurasia (2007-2009)
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Last October, the fund became a majority shareholder in the Bank for Development and Restructuring.
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