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LONDON/ROME (Reuters) - Governors of European Bank for Reconstruction and Development pledged to shift more than 50% of the lender’s investments towards green projects by 2025, gave Iraq the nod to join and formally postponed plans to expand into sub-Saharan Africa
FILE PHOTO: The headquarter of the European Bank for Reconstruction and Development (EBRD) is seen in London, Britain, November 22, Britain 2016. REUTERS/Stefan Wermuth
EBRD governors, currently congregating virtually for the bank’s annual meeting, signed off on the lender’s strategy for the next five years. They are also due to elect a new president on Thursday, with sources saying France’s Odile Renaud-Basso is set to become the next president.
The sign-off confirms the lender’s pivot towards on projects that will help shift countries to a low-carbon economy while governors also agreed as expected to a request from Iraq to become a shareholder of the bank.
The new strategy confirmed policymakers would revisit expanding into Sub-Saharan Africa, which was originally expected to begin this year, to 2022 and focus on its existing countries of operation for now.
“The COVID pandemic has hit all our countries of operations hard,” EBRD governor for Spain Nadia Calvino said in a recorded video message at the opening of the meeting.
“Our priority now is on crisis response, on recovery, and on building back better to accelerate transition.” The EBRD was set up in 1991 to invest in the ex-communist economies of eastern Europe. It now operates in 38 economies, chiefly in Europe, the Middle East, North Africa and central Asia.
Meanwhile French Treasury head Renaud-Basso was on track to take on the top job at the bank, according to sources, after Italy’s former economy minister, Pier Carlo Padoan, had pulled out of the race for president.
Padoan and Renaud-Basso were seen as the front runners for the position, with Polish Finance Minister Tadeusz Koscinski also in the race.The EBRD confirmed that the vote was now between Renaud-Basso and Koscinski.
Renaud-Basso is set to succeed Britain’s Suma Chakrabarti, who finished his second four-year term earlier in the year. If confirmed, she would become the fourth French president of the EBRD.To be elected, a candidate has to receive the votes of a majority of governors, representing a majority of the total voting power of members.
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EBRD's 29th annual meeting for 2020 kicked off on Wednesday, lasting for two days, to discuss the impacts of COVID-19 on emerging economies and how to recover better
The European Bank for Reconstruction and Development (EBRD) has provided some €7 billion in assistance in 2020, until August, to countries it invests in to address the ongoing COVID-19 crisis and its related impacts on their economies; with a special focus on the private sector and small and medium-sized enterprises, UK Chancellor of the Exchequer Rishi Sunak unveiled.
Sunak's statements came during the opening of the EBRD's 29th annual meeting, kicked off virtually from London on Wednesday.
He assured that supporting the private sector, entrepreneurship, and a free market systemis crucial to growth from now on; adding that global collective and coordinated efforts are needed to speed up the recovery from the pandemic. Acting President Jürgen Rigterink said the EBRD’s immediate priority was to help the economies where it invests recover from the economic impact of COVID-19, with a focus on helping them build a resilient and more sustainable future.
Accordingly, the EBRD has launched a solidarity package worth €21 billion to back its member countries from 2020 to 2021, and to address the repercussions of COVID-19, said Rigterink. He revealed that the bank’s revenues recorded €1.4 billion in 2019, the highest in a decade, while the total bank’s investments amount to €10 billion, 46 percent of which was centred on green and low-carbon investments. He also added that during the first six months of 2020, the EBRD financed 1,000 trade deals worth €2 billion, the highest in the bank’s history.
For the EBRD’s 2021-2025 strategy, that is expected to be approved during the meeting, the bank will accelerate the transition to a low-carbon economy, through which green finance will be the majority of the bank’s business by 2025, according to Rigterink.
The EBRD also aims to promote equality of opportunity through access to skills and employment, finance and entrepreneurship; and support for women, young people, and under-served communities. It will also accelerate digitisation, unleashing the power of technology to bring about change for the better, Rigterink expounded. “The strategy affirms as well the EBRD’s interest in a limited and incremental expansion of its activities to sub-Saharan Africa and Iraq during the next five-year period,” he added.
The Prince of Wales, Charles, gave a speech during the opening meeting through a pre-recorded video message, urging business leaders to be “even more ambitious, and even more radical” in moving towards a low-carbon future, as “time is rapidly running out.”
“International financial institutions and development banks such as the EBRD have an absolutely crucial role to play in this. After all, we know that it is not a lack of capital that is impeding our progress, but how we deploy it,” he added.
Referring to the COVID-19 crisis, the Prince said it exemplifies the devastating impact global threats can pose to human and economic wellbeing.
Meanwhile, the EBRD’s new Green Economy Transition approach for 2021-2025 is seeking majority green investment and is expected to be the bank’s new blueprint for supporting its countries of operation pursue a green, inclusive, and resilient recovery from the impact of the pandemic. Moreover, an emergency support programme for infrastructure providers is helping ensure the provision of vital services and the continuation of sustainable infrastructure projects despite acute pressure from the pandemic.
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Iraq to join European Bank for Reconstruction and Development
8th October 2020 in Investment, Iraq Banking & Finance News
Iraq has taken the first step to become a member of the European Bank for Reconstruction and Development (EBRD).
The 71 existing shareholders of the multilateral financial institution approved a request by the country during the Bank's Annual Meeting on Wednesday.
The EBRD promotes private sector development and sustainable and inclusive growth through a combination of investments, policy engagement and technical assistance. Last year, the EBRD financed 452 individual projects in Europe, Asia and Africa and financing exceeded €10 billion for the first time in the Bank's history, rising to €10.1 billion from €9.5 billion in 2018.
Iraq submitted a request for membership in April 2018. The Bank's Board of Governors has now agreed to the first stage in this process. Iraq will have to meet some pre-membership requirements before the membership process concludes with the acquisition of shares.
Jürgen Rigterink (pictured), the EBRD's Acting President, welcomed the decision:
"We are very proud and happy that we will soon be able to welcome Iraq as our latest member. Today we have taken the first step on what we hope will be a long and successful joint journey. We are looking forward to building closer ties with Iraq."
Mohammad Jaafar Al-Sadr, the Ambassor of Iraq to the United Kindom, said:
"We welcome the outcome of the EBRD's Annual Meeting and the support EBRD's Governors for Iraq's request to become a member of the Bank. We appreciate the Bank's shareholders attention to our application and the work of the EBRD Secretary General and his team dedicated to processing this request specifically during this challenging time of Covid-19 pandemic."
As a shareholder, Iraq could subsequently make an application to change its status to recipient country, benefiting from the EBRD's finance and policy support. This request would be addressed by shareholders in a separate process.
The current geographical remit of the EBRD's southern and eastern Mediterranean region does not include Iraq. The resolution adopted by the Bank's Board of Governors today "confirms the EBRD's interest in a limited and incremental expansion to sub-Saharan Africa and Iraq during the next strategy period 2021-2025." Governors will consider an update in 2022, reflecting guidance to be provided at the 2021 Annual Meeting.
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