I am pleased to present the Department of Finance's 2008 Report on Operations Under the European Bank for Reconstruction and Development Agreement Act. This report reflects our government's strong commitment to transparency and accountability, and our desire to promote effective and efficient international financial institutions. In doing so, it responds to the requirement laid out in Article 7 of the European Bank for Reconstruction and Development Agreement Act that the Minister of Finance "shall cause to be laid before Parliament, on or before March 31 next following the end of each calendar year" a report containing a general summary of operations under this Act, including their sustainable development and human rights aspects.
Last year's report described Canada's role at the European Bank for Reconstruction and Development (EBRD) as well as actions taken by Canada to ensure priorities identified in the 2006 report were being met. In addition, the report clearly outlined Canada's policy objectives at the EBRD for the 2008–2010 period:
In this year's report we describe the progress made in 2008 in reaching those goals, and the specific short- and medium-term actions being taken by Canada that are making this possible. Through this publication, the Government's intent is to provide members of Parliament and the Canadian public with a full understanding of Canada's EBRD objectives.
The 2008 report also contains a brief description of the EBRD's operations and Canada's role at the Bank, as well as an overview of turning points in 2008, such as the nomination of the Bank's new President, the Bank's response to the financial crisis, and the Bank's decision to make Turkey an EBRD recipient country.
In an increasingly challenging time for the international economy, the EBRD is taking on a more important and more demanding global role. It is my hope that this report will leave parliamentarians and all Canadians with a better understanding of Canada's contribution to this critical institution, and the many ways our country is working to ensure the EBRD fulfills its essential transition mandate.
The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
The European Bank for Reconstruction and Development (referred to in this document as the EBRD or the Bank) began its operations in 1991. Its aims are to foster the transition towards open, market-oriented economies in Central and Southeastern Europe, as well as in the successor states of the former Soviet Union, and to promote private and entrepreneurial initiative in those countries that are committed to the fundamental principles of multi-party democracy, pluralism and market economics.1 Where countries are not committed to these principles, the Bank engages only with the private sector. To deliver on its mandate, the Bank focuses its activities on assisting its 29 countries of operations in implementing economic reforms, taking into account the particular needs of countries at different stages in the transition process.
The Bank's overriding focus is the private sector, with a strong operational emphasis on enterprise restructuring, including the strengthening of financial institutions, and the development of the infrastructure needed to support the private sector. The EBRD's charter stipulates that not less than 60 per cent of its financing commitments should be directed either to private sector enterprises or to state-owned enterprises implementing a program to achieve private ownership and control. All of its financing projects have to demonstrate environmental sustainability, as per the Bank's Articles of Agreement. The Environmental Policy is reviewed every three years to help ensure the Bank adopts state-of-the-art best practices in all projects.
In promoting economic transition, the Bank acts as a catalyst for increased flows of financing to the private sector, as the capital requirements of these countries cannot be fully met by official multilateral or bilateral sources of financing, and many foreign private investors remain hesitant to invest in the region, particularly the central Asian republics.
The EBRD's operations to advance the transition to a market economy are guided by four principles: transition impact, additionality, sound banking and environmental sustainability. Financing is provided for projects that expand and improve markets, help to build the institutions that underpin a market economy, and demonstrate and promote market-oriented skills and sound business practices. EBRD financing must also mobilize additional sources of financing and not displace them. Bank projects must be sound from a banking perspective, thus demonstrating to private investors that the region offers attractive returns. Adherence to sound banking principles also ensures the financial viability of the EBRD and hence its attractiveness as a co-investment partner for the private sector. Integrity is another important aspect of the Bank's due diligence in selecting projects.
The Bank's medium-term operational priorities are premised on: the central importance of creating and strengthening those institutions that ensure markets work well; the key role that small businesses can play in creating dynamic, competitive and more equitable economies; and the key role the transition process plays in supporting the principles of multi-party democracy and pluralism.
To achieve these priorities the Bank focuses on:
The EBRD has 63 shareholders: 61 countries, the European Community and the European Investment Bank. There were 292 countries of operations last year.
The EBRD's share capital is provided by member countries, with proportional voting rights. The EBRD's authorized capital is €20 billion—Canada's capital share is 3.4 per cent.
The highest authority in the Bank is the Board of Governors. It meets annually and approves the institution's annual report, net income allocation, financial statements and independent auditor's report, the election of the Chair and Vice-Chair for the next annual meeting, as well as other items requiring Governors' approval. A Governor and an Alternate Governor represent each of the 63 shareholders.
The Board of Directors is responsible for the general operations of the Bank. It is composed of 23 members, with each representing either one member country or a constituency of member countries. The Board helps to set the strategic and financial course for the Bank, in consultation with management.
The Board has established four committees that are responsible for overseeing the activities of the Bank's management team: the Board Steering Group, the Audit Committee, the Budget and Administrative Affairs Committee, and the Financial and Operations Policies Committee. This division of labour is consistent with good corporate governance practices and provides an appropriate system of checks, balances and incentives. In addition, the structure ensures a more effective discussion by the Board, once initiatives are ready for approval.
The Board Steering Group is responsible for the coordination of the Committees' work programs to avoid overlap and ensure timely completion. In addition to some administrative duties, the Chair of the Group is the main liaison between the Board and management. The Group is currently chaired by the Canadian Director.
The Audit Committee's primary objective is to ensure that the financial information reported by the Bank is complete, accurate, relevant and timely. The Committee oversees the integrity of the Bank's financial statements and the compliance of its accounting and reporting policies with the requirements set out in the International Financial Reporting System. It also reviews the EBRD's system of internal controls and its implementation, as well as the functions of the internal audit, evaluation and risk management teams. The Committee is currently chaired by the Dutch Director.
The Budget and Administrative Affairs Committee is responsible for ensuring that the Bank's budgetary, staff and administrative resources are aligned with its strategic priorities. To this end, the Committee reviews the medium-term resource framework, annual budgets and the business plan. It also oversees the Bank's human resources policies, including ethics. The Committee is currently chaired by the Norwegian Director.
The Financial and Operations Policies Committee oversees the Bank's financial and operational policies, including the annual borrowing plan prepared by the Treasury Department. The Committee also reviews country strategies and proposed projects. The Committee is responsible for the transparency and accountability of the Bank's operations, as laid out in the 2006 Public Information Policy. Since 2007, the Committee has also been charged with overseeing the net income allocation process. As well, it is responsible for the renewal of the Bank's Environmental Policy. The Committee is currently chaired by the French Director. The Canadian Director is a member of the Committee.
The EBRD offers a full array of financial products and services, including:
Eligible projects must be supported by a strong business case, benefit the economy and the transition process of the host country, and comply with the EBRD's environmental guidelines. Projects in all industries are eligible for EBRD financing, except those producing military equipment, tobacco and distilled alcohol. Although it is primarily a financier of private sector projects, the Bank may provide finance to state-owned companies, provided they are operating competitively and, in particular, that such financing facilitates or enhances the participation of private and/or foreign capital in such enterprises. The EBRD can finance private companies that are wholly locally owned or foreign owned, as well as joint ventures between foreign and local shareholders.
In order to ensure the participation of investors and lenders from the private sector, the EBRD generally limits the total amount of debt and equity financing for any single project to 25 per cent of total estimated project costs. However, in certain circumstances, and particularly in the current environment, where the syndications market is closed to most of the Bank's clients, the Bank provides a larger share of the project costs. In rare cases, such as when a project is in corporate recovery, the Bank may become the largest shareholder in order to turn the company around and sell it.
EBRD investments range from €5 million to €250 million.3 Smaller projects are financed both directly by the EBRD and through local financial intermediaries. By supporting local commercial banks, micro-finance organizations, equity funds and leasing facilities, the EBRD has helped finance over 1 million smaller projects.
The EBRD charges market rates for its private sector financing and provides uniform loan pricing for sovereigns of LIBOR (London Interbank Offered Rate) +100 basis points. In addition, fees vary according to the nature of the project and the amount and complexity of the work required of the EBRD.
The EBRD's equity and quasi-equity investments are funded out of its net worth—the total of paid-in capital and retained earnings. Of the funding required for its lending operations, 100 per cent is borrowed in the international financial markets through public bond issues or private placements. The EBRD's bond issues have been given AAA ratings by both Moody's Investors Service and Standard & Poor's.
The Bank uses its close relationship with governments in the region to promote policies that bolster the business environment. The EBRD advises governments on promoting a sound investment climate and stronger institutional framework, which are important for the functioning of the private sector. This dialogue is typically supportive of projects in which the Bank invests. Specifically, the EBRD works with government officials to promote sound corporate governance, anti-corruption practices, fair and predictable taxation policies and transparent accounting standards. In addition, a dedicated legal team advocates for an effective legal and regulatory framework which is not directly tied to a project.
Technical assistance improves the preparation and implementation of the EBRD's investment projects and provides advisory services to private and public sector clients. It increases the impact of EBRD projects on the transition process by supporting structural and institutional changes, and it assists legal and regulatory reform, institution building, company management and training. Technical assistance is important to the Bank as it allows thorough preparations for investments, more effective investments in general, and investment opportunities in higher-risk environments in particular.
The EBRD's bankers and their project leaders have the primary responsibility for ensuring a project's compliance with four principles: transition impact, additionality, sound banking and environmental sustainability. However, to ensure that projects continue to generate a significant transition impact, risk management and evaluation groups provide independent advice, lessons learned, and monitoring and review functions throughout the project cycle.
Canadian Staff at the EBRD—Canadians are well represented on EBRD staff. At the end of 2008, there were 21 Canadian professionals on the staff of the EBRD, representing 2.7 per cent of total professional positions, just under Canada's 3.4 per cent share of the institution's capital. Canadians fill the following senior positions: Deputy Chief Compliance Officer; Director for Czech Republic, Hungary, Slovak Republic and Slovenia; and Director of the Early Transition Countries Initiative.
The Bank releases considerable information on its various activities. Bank publications include information guides (such as Financing With the EBRD), evaluation reports, special reports (such as the annual report and Transition Report), country strategies and assorted fact sheets.
Information can also be obtained on the Bank's website at www.ebrd.com.
Requests for information can be addressed to:
European Bank for Reconstruction and Development
One Exchange Square
London, EC2A 2JN
Or to: Office of the Director for Canada and Morocco
Canada's membership in the EBRD, and its active participation in the discussion of policy and operational issues, is an important means to help shape regional norms and rules in the EBRD's 29 countries of operations. By supporting continued political and economic reform, Canada is contributing to the countries of operations' stability and integration into the world economy.
Canada shares with the Bank the overriding objective of developing a strong private sector in its countries of operations, by mobilizing financing for projects with a high transition impact and by providing advice and technical assistance to businesses and governments. Through its participation in the EBRD's Board of Directors, Canada has been able to press for greater attention to governance issues in the Bank's operations. Moreover, Canada has been able to help shape the environmental and social safeguards that govern the EBRD's lending. The Bank also provides Canada with a vehicle to reach transition countries that are not normally part of our bilateral development assistance programs. For example, the Canadian International Development Agency (CIDA) gave less than $100,000 to countries like Albania, Uzbekistan and the Kyrgyz Republic and nothing to Turkmenistan, so in these cases the EBRD provides Canada with a way of impacting development/ transition goals.
Canada is also interested in raising awareness among Canadian companies about the EBRD. Canadian companies can seek financing for projects undertaken in the Bank's countries of operations. In addition, in order to implement transition projects, the Bank often relies on goods and services from its members through procurement. This allows Canadian firms to have access to different markets and enjoy commercial opportunities they may not have otherwise had. For example, consulting services is an area where Canada has a comparative advantage and where Canadians have been successful in winning EBRD-financed contracts. Canada was the 11th largest source country for the Bank's technical cooperation activities (up from 15th in 2007) as Canadian consultants were awarded €2,179,587 under 71 contracts in 2008.
Within the Canadian government, responsibility for oversight of the EBRD's activities resides with the International Finance and Development Division of the Department of Finance. In consultation with Foreign Affairs and International Trade Canada and CIDA, the Department of Finance regularly reviews the Bank's policy papers and proposed country strategies, and provides advice to the Canadian Director.
At the end of 2008, the total authorized capital of the Bank was €20 billion. Canada's share is 3.4 per cent—or €680 million (C$1 billion), of which 25.3 per cent, or C$252.7 million, is paid in. The remainder is callable and would be provided only in the unlikely event that the institution would face severe financial difficulty. Canada's paid-in contribution is treated as a non-budgetary expenditure, as shares in the Bank are considered an asset.
Canada's paid-in capital is being provided in a series of instalments of cash and non-interest-bearing demand notes, which are then encashed over a five-year period. Payments are made in eight equal annual instalments (40 per cent in cash and 60 per cent in non-interest-bearing demand notes encashed over five years). Canada's last note encashment will be made in 2009.
|Year||Total cash payments in US$
(includes note encashment and cash payments)
|Total cash payments in
(includes note encashment and cash payments)
1 Exchange rates are based on Bank of
Canada annual noon exchange rate averages.
2 2008 average exchange rate used as an estimate.
As part of a loan or equity investment, the EBRD often provides its clients with advice on how to improve the project by ensuring thorough preparation and effective implementation. This advice is often paid for out of special funds, which are set up by donor countries and international institutions and are managed by the Bank. These funds mobilize investment capital and expertise in the EBRD's countries of operations by giving local business access to consultant experts. The consultants assist in the preparation of projects and strengthen local management know-how. They also develop environmental strategies and work to improve the legal framework in which businesses operate. Canada has contributed to the following special funds:
Early Transition Countries Multi-Donor Fund—CIDA is one of 12 donors to this fund, which was launched in 2004 and targets Bank programming in the poorest countries of the EBRD's operations (Mongolia, Moldova, Azerbaijan, Armenia, Georgia, Tajikistan, the Kyrgyz Republic and Uzbekistan). This fund is the first EBRD funding mechanism to be classified Official Development Assistance by the Development Assistance Committee of the Organisation for Economic Co-operation and Development. Since 2004, Canada has contributed C$1.7 million to this untied fund.
Western Balkans Multi-Donor Fund—The Western Balkans Multi-Donor Fund was established in 2006. This fund is active in Albania, Bosnia and Herzegovina, Macedonia, and Serbia and Montenegro (including Kosovo). It focuses on technical support to prepare and implement investments that are important for economic growth, regional cooperation and integration with the European Union (EU). Priority areas are energy, transport, the environment, private sector development and institution building. At present the fund has 15 donor countries. It has been an extremely useful fund for mobilizing and leveraging CIDA funds with those of other donors to increase donor impact in the region.
Canadian Technical Cooperation Fund—The main purpose of this fund is to provide financing to hire consultants for EBRD projects across a wide range of sectors and EBRD countries of operations. Canada has transferred C$21 million to the EBRD for technical cooperation since 1992. Canada's contribution was renewed in 2006. It will continue until 2010 and include technical cooperation in Armenia, Georgia, Russia and Ukraine. The sectors of focus include: environment, private sector development and municipal governance.
Chernobyl Shelter Fund (CSF)—The main purpose of this fund launched in 1995 is to secure the sarcophagus around the destroyed Unit IV nuclear reactor in Ukraine. The CSF finances the implementation of the Shelter Implementation Plan, which includes the construction of a permanent confinement facility, enhanced radiation monitoring, and general improvements to nuclear and worker safety. The total estimated cost of this project is estimated to be between US$1.1 billion and US$1.2 billion, of which US$716 million has been pledged so far. Canada has pledged US$33 million, including US$0.8 million of bilateral assistance for ventilation stack repair. Current resources are expected to cover work until 2010. However, new pledges are expected to be required during 2009 to cover a financial shortfall of approximately US$130 million between 2010 and the project's proposed completion date. Canada's Global Partnership Program contributed an additional C$8 million to the CSF in 2006.
Nuclear Safety Account (NSA)—This facility was established in 1993 to help address nuclear safety issues in Central and Eastern Europe. Specifically, the NSA finances the decommissioning of old Soviet-style reactors including those at Chernobyl, where donors are funding the construction of an interim spent nuclear fuel storage facility and a liquid radwaste treatment facility. Canada has contributed C$19.5 million to the total fund of US$280 million. Although work was initially slowed by difficulties with the companies awarded the construction contracts, both facilities are now progressing. In 2008, the EBRD announced that the NSA would face a financial shortfall of approximately US$170 million to finish these projects. Due to this shortfall, donors (including the Group of Eight, Ukraine and Russia) made additional pledges to the NSA in 2008–09.
CIDA-EBRD Cooperation Fund for Southeastern Europe (CFSEE)—By 2002, Canada had contributed C$10 million in support of the EBRD's South Eastern Europe Action Plan, to be used for technical cooperation and co-financing activities. These funds were used in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Romania, Serbia, and Montenegro, and supported activity by Canadian consultants. In 2003, an additional C$6 million was added to the CFSEE, which focuses on CIDA priority sectors and countries of focus. CIDA is participating, through the CFSEE, in the Western Balkans Initiative, which includes within its scope a multi-donor technical cooperation fund and is intended to improve donor coordination arrangements in the Western Balkans.
TurnAround Management Programme—The TurnAround Management Programme was established in 1993 to match senior industrial advisors from market-driven economies with chief executives of selected firms in the region that are in financial difficulty. The objective is to provide management know-how and develop business skills so that these companies can become competitive and profitable. Canada has contributed C$3 million to this fund.
Northern Dimension Environmental Partnership (NDEP)—The NDEP was created in 2001 to fund the safe and secure management of the spent nuclear reactor fuel and other radioactive wastes generated by the dismantling of Russia's Northern submarine fleet. The NDEP's focus on infrastructure is critically important as it fundamentally helps improve the dismantlement process by securing spent nuclear fuel and radioactive material at various sites and increasing storage capacity. By the end of 2006, the NDEP had secured investments of more than US$1.5 billion for environmental projects. In 2003–04, Canada joined over 10 other donors by contributing C$32 million to the NDEP. Canada's Global Partnership Program is responsible for monitoring the NDEP. While progress has been satisfactory, Canada is not considering an additional contribution.
In 2008, Mr. Jean Lemierre stepped down as the President of the EBRD. After being elected by the Board of Governors on May 19, 2008, Mr. Thomas Mirow, formerly State Secretary at the German Federal Finance Ministry, replaced Mr. Lemierre on July 3, 2008.
Credit constraints, falling asset values and consumer retrenchment have triggered the broadest economic recession in the countries of the Organisation for Economic Co-operation and Development in more than half a century. The situation has set the stage for a second wave of crisis transmission, this time through "real channels." Commodity prices have declined sharply and trade volumes are falling rapidly, significantly affecting the EBRD's countries of operations.
While the origin of the crisis was external to the region, the financial crisis has rapidly spread though the EBRD's countries of operations. Balance sheet adjustments (deleveraging) and a reassessment of risks by global financial institutions led to sharp drops in net capital inflows in the region, creating huge balance of payment funding gaps. As a result, a number of countries in the region have received loans from the International Monetary Fund (IMF), including substantial amounts for Hungary and Ukraine.
The impact of the crisis on the region is still unfolding. The impact varies from one country to another depending on pre-existing vulnerabilities, level of integration with the EU and core economic activities. Commodity-exporting countries are suffering the impact of a decline in both the volume and price of commodities, while countries with weak, undercapitalized banking systems are subject to intense pressure on their financial sectors. Countries with higher levels of industrialization are significantly affected by real sector transmission. Less developed countries may not be as vulnerable to financial or real sector transmission given their limited market integration, but are often heavily reliant on workers' remittances, which are expected to decline as a result of the downturn in construction and other industries in Russia and Western Europe.
Despite the financial crisis, most countries of operations progressed towards market-oriented economies in 2008, as shown in the Bank's latest Transition Report. However, as the crisis deepens, the risk that progress will slow or even reverse will increase. The most immediate impact will be felt in the financial sector, where some of the achievements over the last two decades are at risk. Difficulties in the financial sector may require increased government ownership in many of the Bank's countries of operations. While this has occurred in several Western countries, the road back to private ownership may be more difficult in transition economies given deeper concerns in the region about the market model.
Increased government ownership may extend to the non-financial sector with pressure to bail out ailing firms and infrastructure projects. A crisis in the real economy is also likely to extend to trade, and ultimately may threaten some of the measures undertaken to open these economies to the rest of the world. The effects on transition are expected to increase, depending on the depth and length of the global economic downturn.
Reflecting shareholder support for a Bank response to the crisis throughout the region, the upper end of the business volume range for 2009 was raised by 20 per cent to €7 billion. However, given the limited financial resources of the Bank, the Bank's response is based on its project and regional expertise rather than lending volume. The Board of Directors approved the Bank's operational response to the crisis on December 10, 2008. In developing its response, the Bank aimed to:
The Bank has taken steps to ensure it is up to date on the development of the crisis and is able to draw operationally relevant conclusions. Key areas in which monitoring and analysis have been stepped up include country risk updates; assessments of crisis channels, sector-specific vulnerabilities and sector demand shifts; financing conditions; political and economic policy implications; and medium-term implications for transition and transition impact assessment.
Following its assessment of which areas of the crisis it can adequately address, the Bank developed response packages for the financial and corporate sectors. The financial response package is based on a systematic review of existing clients aimed at establishing their liquidity, funding and capital adequacy situation, and needs. Such information allows the Bank to determine what steps need to be taken to enable banks to continue financing key client groups. EBRD financing in the form of equity, quasi-equity or debt will be combined with institutional support in crucial areas such as risk management.
The enterprise response package is based on a systematic review of the needs of clients in selected vulnerable sectors, including the car and automotive supply industry, the food and retail industry, property, metals, and construction materials. Early evidence suggests that working capital constraints, short-term debt refinancing and balance sheet strength are likely to become key risk factors in the real sector.
In addition to the response packages, the Bank has stepped up its policy dialogue with a focus on the financial sector in close cooperation with the IMF. More broadly, crisis-specific policy dialogue in all crisis countries is likely to include intensive consultations with central banks and other relevant agencies, with emphasis on diagnostics and the design of private sector–led consolidation processes and essential regulatory changes (e.g. bank insolvency, corporate governance in banks).
In short, the Bank's crisis response is targeted at protecting the Bank's portfolio, generating a timely and relevant set of response projects and supporting targeted policy dialogue. In addition, the response is designed to ensure flexibililty and consistency across the Bank's crisis-driven activities. Given the significant uncertainties surrounding the crisis, the Bank will undertake a mid-year review of the implementation of its 2009 Business Plan with a particular focus on its crisis response components.
Turkey has been a member of the Bank since the Bank started operations in 1991. In April 2008, the Turkish government officially requested to become a country of operations of the EBRD. At the Bank's annual meeting in May 2008, the Board of Governors directed the Board of Directors to undertake a strategic review of the implications of granting recipient country status to Turkey. The review covered several topics including the EBRD's objectives in Turkey, transition challenges and a transition impact assessment, activities of other international institutions in Turkey, and the linkages between the Bank's operations in Turkey and the implementation of the third Capital Resources Review (CRR3).4
In light of the strategic review, the Bank's Board of Governors agreed to Turkey becoming an EBRD country of operations, which Canada supported. The EBRD anticipates investing approximately €500 million in projects in Turkey by the end of 2010. The Bank will support the development of Turkey's private sector and will focus on financing small and medium-sized companies that may come under pressure due to the current financial crisis and global economic slowdown.
|Number of projects||302||353||301||276||265|
|Total project value||13,490||14,200||13,851||10,488||12,932|
|Expenses and depreciation||-250||-251||-225||-218.9||-189.8|
|Operating profit before provisions||-1,231||1,353||2,442||1,325.0||468.8|
|Provision for impairment of
|Net profit for the year||-826||1,884||2,389||1,525.6||401.6|
|Reserves and retained earnings||6,552||8,676||6,974||4,656.1||1,686.0|
|Provisions for impairment
of loans and guarantees (cumulative)
|Total reserves and provisions||6,600||8,800||7,315||5,007.7||2,225.5|
Canada and other shareholders typically raise concerns and questions about specific Bank operations before they get to the Board. As a result, decisions at the Board are generally taken by consensus. Directors may, however, abstain or vote against projects or policies in consultation with their constituencies. The Canadian Director supported all policies in 2008 (with the exception of the Turkmenistan strategy update), as well as the vast majority of the 155 projects approved by the Board. There were 5 exceptions, which reflected 3 main reasons:
1. An EBRD loan to Globus, a Russian hypermarket development 400 kilometres outside Moscow. The project came to the Board before the EBRD's region of operations was affected by the financial crisis. At that time, it was clear the sponsor and the borrower would be able to raise funds from commercial institutions.
2. An EBRD loan to Belgazprombank for on-lending to micro and small enterprises. Belgazprombank is partly owned by Gazprom and the state ownership was considered not to be improving transition.
3. An EBRD equity investment to ARX Private Equity Fund providing equity capital in the mid-market of Central and Southeastern Europe. The project came to the Board prior to the financial crisis. Given the fund manager's positive reputation in the market, it appeared there would be no difficulty raising funds. As well, no new products were being proposed.
4. An EBRD facility called EU/EBRD Accession Compliance Facility to help small and medium-sized enterprises comply with EU standards in areas of environmental protection, health and safety, and product quality and safety. The Canadian Director suggested it would be better for the European Investment Bank to provide this loan. In addition, the incentive payments involved distorted the project market and were not perceived favourably.
5. An EBRD loan to Geo Steel, a steel company in Georgia, to construct and operate a steel mini-mill.