OREANDA-NEWS. The European Investment Bank Group (EIB), the World Bank Group*, and the European Bank for Reconstruction and Development (EBRD) have met and even exceeded their commitments to make available at least EUR 30 billion in 2013 and 2014 to sustain growth and investment in Central and South Eastern Europe (CESEE)** following the global financial crisis.  Actual assistance provided under the second “Joint IFI Action Plan for Growth” (JIAP) during these two years totalled EUR 42.7 billion.

This JIAP financing – supplied through more than 770 individual projects – had a substantial impact on the region. Gross financial inflows under the Action Plan accounted for about 6 percent of annual investment into Central and South Eastern Europe, and were equivalent to about 1.5 percent of the region’s total Gross Domestic Product.  Up to a third of the financing went to funding local commercial banks, allowing them to maintain their provision of credit to small- and medium-size enterprises, and supporting a rebalancing of the local banking sector.

Another third of JIAP assistance went to strengthening the region’s infrastructure, particularly for transport, energy, and communications, and helping to integrate the countries into Trans European Networks. JIAP also financed investments to raise energy efficiency and help develop and promote the use of renewables, reducing the impact of climate change.  Other projects strengthened the capital positions of banks; promoted the development of local capital markets; and improved the productivity, innovation, and export orientation of firms in the region.

In addition, JIAP assistance facilitated the effective use of EU Structural and Cohesion funds.

The Joint IFI Action Plan underscored the very close cooperation among the three IFIs within the region, and they will continue to build on this productive collaboration in the future.

The final report on JIAP was presented today at an event held at the Brussels-based think tank Bruegel.

Wilhelm Molterer, Vice President of the European Investment Bank, stated: “We have delivered on our commitments, and with nearly 800 projects and loans financed by all institutions in the framework of the JIAP, the results on the ground are tangible. The success of this plan will spur tighter co-operation among our three institutions. From providing a lifeline with our credits and helping to prevent a systemic failure, we now need to focus on promoting competitiveness and providing innovative ways of support including risk-bearing capacity. One important vehicle for the EU Member States covered by the JIAP will be the ‘Investment Plan for Europe,’ which is designed to stimulate investments of EUR 315 billion and which will be implemented by the EIB, in cooperation with other IFIs.”

Philippe Le Hou?rou, Vice President of the European Bank for Reconstruction and Development, commented:  The Joint IFI Action Plan for Growth has confirmed the major impact that our institutions have. Our funding has been the equivalent of about 1.5 percent of total GDP a year across Central and South Eastern Europe at a time when there is still significant cross-border deleveraging.  Our enhanced coordination under the Action Plan has also created special synergies and efficiencies benefitting our countries. Going forward, we see opportunities for working together in the implementation of the Investment Plan for Europe in the CESEE region. In addition, the EBRD plans to significantly step up its policy advice to complement and reinforce the impact of its investments.”   

Laura Tuck, Vice President of the World Bank’s Europe and Central Asia region, emphasized:  “The Joint IFI Action Plan helped the region in its time of need following the global financial crisis.  For its part, the World Bank Group mobilized the IFC, MIGA, as well as IBRD support – it was a true Group effort. Going forward, the World Bank, IFC and MIGA will step up their support to the countries in the region by financing the needed structural reforms that are critical to ensure social, economic, and environmental sustainability, continue to support private sector investments in key sectors and help them mitigate the political risks.  The agenda that was big before is now even bigger.”

EIB, World Bank Group, and EBRD had decided to support CESEE through joint forces after the region had been severely affected by the 2008-09 crisis, as capital inflows through local banking systems came to a sudden stop, and export markets dried up. The region rebounded from this slump in 2010-11, in part thanks to external support under the first Joint IFI Action Plan and the coordination of cross-border banking under the Vienna Initiative.

But growth was again interrupted in 2012 over much of the region, as the faltering activity in the euro area affected the region’s exports, and a renewal of cross-border bank deleveraging threatened to deprive local economies of credit. In light of these prospects, and to support sustainable growth, the three IFIs launched the second JIAP in November 2012 under which the EIB Group provided EUR 28.3 billion (commitment: EUR 20 billion), the World Bank Group EUR 7.4 billion (EUR 6 billion), and the EBRD EUR 7 billion (EUR 4 billion).

Going forward, the three institutions will? build on the successful record of the Joint IFI Action Plan for Growth and continue tackling in close coordination key challenges in emerging Europe and possibly other regions they collectively operate. This can include support for raising potential output through higher competitiveness, innovation, and infrastructure investment.