OREANDA-NEWS. The European Bank for Reconstruction and Development (EBRD) plans to limit its activities in Belarus in 2013-2016 solely to the support of the private sector, while curtailing cooperation with state-owned companies.

An implication to this effect arises from the bank’s new draft strategy for Belarus (posted on the EBRD web site), which will be adopted soon, according to Francis Delaey, head of the EBRD Office in Minsk.

“In light of recent political and economic developments, while continuing its policy of constructive engagement to promote reform, the Bank will further calibrate its engagement in Belarus to limit its involvement with state-owned enterprises in the areas of trade finance and energy efficiency credit lines.”

“The Bank will ensure that no support, either financial or technical, will be extended to the Belarusian central authorities or central state in any manner. This entails the exclusion from consideration of any large-scale public infrastructure lending, including in the areas of transport and power infrastructure, as well as direct participation in privatisation of state assets through purchase of shares owned by the state or state entities.”

The EBRD experts, who prepared the document, attribute their stance to the fact that the Belarusian authorities’ commitment to political pluralism, media freedom, the independence of civil society and the legitimacy of political opposition is uncertain, while the use of wage restrictions, price controls and directed lending continue to characterise the state’s centralized management of the Belarusian economy.

The bank will focus its strategic approach in the next Strategy period on those areas where it can most benefit private sector business and the Belarusian people. The Bank will continue to focus on promoting private sector development across all sectors of the economy, both directly and indirectly, with a particular emphasis on manufacturing and agribusiness. The Bank’s priorities in this area will include supporting the transparent privatisation of state-owned entities and assets, provided the Belarusian central state does not benefit directly from the Bank’s investments; assisting partner banks to deepen financial intermediation in underserved segments and geographic areas and improve access to finance by MSMEs; and continuing to engage the authorities through policy dialogue to implement structural reforms that support private sector development and improve the country’s investment climate.

To ensure the economy becomes more energy efficient over time, the Bank will offer new instruments to Belarusian companies, via partner banks, and technical cooperation support to the participating institutions in order to develop necessary human resource capacity and skills. The Bank will manage the energy efficiency credit lines to state-owned enterprises significantly below the current ceiling of 40 per cent.

Building on its experience in the municipal waste water sector, the Bank may consider extending its existing Environmental Infrastructure Facility to other municipalities and/or engage in other municipal sectors that benefit the environment or the local population, such as solid waste management, and have strong transition impact. Policy dialogue on structural reforms will continue to be an inherent part of the Bank’s activities in the municipal sector.