Archived - Canada at the European Bank for Reconstruction and Development 2008 : 2

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Canadian Policy Priorities for 2008–2010

To promote greater transparency and accountability, the Government identified three standing priorities for the 2008–2010 period in the 2007 annual report:

1. Promoting good governance and accountability, and effective use of the Bank's capital base.
2. Ensuring that the EBRD maintains a strong transition focus and is highly selective in its programming.
3. Promoting environmental sustainability and gender equality of EBRD projects.

The following section describes progress that was made in 2008 and specific actions taken by Canada to support those priorities.

The financial crisis and its impacts on the Bank's countries of operations as well as the Bank's resources and mandate will have a great influence over the actions taken by Canada at the EBRD in 2009. Canada's priority for 2009 will be to ensure that the Bank provides an adequate response to the crisis. A key part of this work will be done within the Group of Twenty (G20). In November 2008, the leaders of the G20 nations met in Washington, DC, to discuss the financial crisis. Following the summit, G20 members created a working group on the World Bank and other multilateral development banks (MDBs). This working group's mandate is to ensure that the World Bank and MDBs have sufficient resources and instruments to respond to the financial crisis, as well as to provide momentum for further governance and effectiveness reforms. Canada is actively participating in the working group.

The response to the crisis will also be important in the context of the discussions on the Bank's finances as part of the fourth Capital Resources Review (CRR4) in 2009. The outcome of this review will be very important for the future of the EBRD and Canada's involvement in the Bank. In considering Canada's position, we will take into account our three standing priorities for the Bank. Specific actions regarding the CRR4 are listed for each priority.

Assessment of Progress on the 2008 Priorities and Planned Actions Going Forward

Canada made strong efforts to focus on the priorities set out in the 2007 Report. The summary chart provides a colour-coded assessment of the EBRD's progress against Canada's priorities (not Canada's efforts to achieve the priorities). Full reporting on actions, results and remaining challenges are also provided after the summary chart.

Colour code: Little progress, Some progress, Good progress

1. Governance and Accountability
Priority	Short-Term Action (2008)	Medium-Term Action (2009–2010)
1.1 Greater Transparency in the Appointment Process of the EBRD President	Push the Bank to develop a transparent, open and merit-based process for selection of the President that is in line with the standard developed by other international filnancial institutions.	Encourage the Bank to consider officially incorporating a new transparent, open and merit-based process into the EBRD by-laws.
1.2 Sustainable Finances Encourage the Bank to maintain a sufficient administrative budget in support of the EBRD's mandate and maintain a sustainable capital base.	Advocate for a reformed budget process and a decision on the 2007 net income allocation which ensures discipline and selective use of the Bank's capital in support of activities that are consistent with the EBRD's mandate.	Advocate for a gearing ratio interpretation change to make more effective use of the Bank's capital.
2. Institutional Effectiveness
Priority	Short-Term Action (2008)	Medium-Term Action (2009–2010)
2.1 Article 1 Promote economic and democratic reform.	Actively participate in Board discussions on the Uzbekistan and Turkmenistan country strategies. If the analysis indicates that these countries have been slow in implementing Article 1, continue to support limited scope of Bank activities (i.e. support small EBRD operations with private sector entities that address basic human needs). Press the Bank to identify effective approaches for supporting transition in countries whose commitment to democratic and economic reforms is waning. For example, the Bank should consider focusing on engagement with companies that can demonstrate to the rest of the industry the benefits of environmental and business best practices.
2.2 Strong Transition Impact	Encourage the Bank to continue its analysis of indicators to ensure a better assessment of its transition impact.	Encourage the Bank to remain disciplined and selective in the use of its capital in support of activities that are consistent with its mandate.
3. Environmental Sustainability and Gender Equality
Priority	Short-Term Action (2008)	Medium-Term Action (2009–2010)
Promote sustainable best practices with respect to the EBRD's investments.	Advocate for a timely adoption of the Bank's Environmental and Social Policy, with a target date of the summer of 2008. In collaboration with other donors, work with the Bank to develop products and policies to help address gender inequality in the region, with the objective of improving the economic situation of women.	Work with donors and Bank staff to ensure the implementation of the Gender Action Plan and provide assistance to develop projects and policies. Encourage the Bank to examine its internal practices and policies with respect to gender equality. Monitor the Environment and Sustainability Department on the effective implementation of the new Environmental and Social Policy, the creation of Good Practice notes for clients and internal training for Bank staff on the implications of the new policy.

1. Governance and Accountability

A key element underpinning the Bank's ability to influence transition in its countries of operations is the demonstration effect of its own governance policies. Canada supports the Bank's commitment to enhance the transparency of its own activities, which is in line with modern corporate governance practices. This focus is also consistent with efforts at other international financial institutions.

Priority 1.1: Greater Transparency in the Appointment Process of the EBRD President

Little progress

While important progress was made in 2006 and 2007, with the Bank significantly broadening its public disclosure policy and holding public consultations on a country strategy for the first time, Canada continued to press the Bank to adopt the very highest standard of internal governance.

In 2008, the selection of the new EBRD President was completed outside an open and merit-based selection process, without the involvement of all the Bank's Governors. Despite this setback, Canada continued to underline that it favours a transparent, open and merit-based process for the selection of the heads of international institutions at the Bank's 2008 annual meeting. This puts Canada in a better position to push for change in the future.

Priority 1.2: Sustainable Finances

Some progress

In 2006 and 2007, the Bank's results exceeded the projections of the CRR3 strategy and framework, which set out the strategic direction of the Bank for the 2006–2010 period. During these two years, strong growth in the EBRD's portfolio increased pressure on the Bank's capital adequacy and risk ratios.

In 2008, Canada advocated for a decision on the 2007 net income allocation which would ensure discipline and selective use of the Bank's capital in support of activities that are consistent with the EBRD's mandate. In particular, the Canadian Director, along with like-minded Directors, pressed the Bank to develop the Strategic Operations Framework, which provides more transparency to the net income allocation decision and capital adequacy needs.

The Bank currently has sufficient capital and reserves to implement the crisis response it has developed for 2009, which includes an increase in its lending volume of 20 per cent to €7 billion. However, as the crisis unfolds, current lending headroom may prove to be insufficient for the Bank to continue to fulfill its mandate in the crisis context. As such, discussions on a change in the EBRD's gearing ratio will take place in 2009. A change in the interpretation of the gearing ratio would allow for a more efficient use of capital.

The ongoing financial crisis will also put pressures on the Bank's administrative budget. The Bank's plan for a 20-per-cent increase in lending activity for 2009 will present new demands on the EBRD's resources. The Bank has already increased its monitoring and analysis activities with the goal of providing more timely and relevant assistance to the region. The intensity and costs of monitoring activities could also rise as project risks increase. The Bank's administrative resources are limited and must be employed where they can most effectively advance the institution's mandate. Going forward, Canada will seek to ensure that the EBRD's overall administrative expenses are in line with those of other multilateral development banks.

2. Institutional Effectiveness

Priority 2.1: Article 1

Little progress

The EBRD has an explicit political mandate, set out in Article 1 of the Agreement establishing the European Bank for Reconstruction and Development, which is to foster transition in countries that are committed to and applying the principles of multi-party democracy and pluralism. The EBRD's analysis shows that the establishment of strong, democratic institutions is a key transition success factor. In countries with poor democratic and human rights records, the Bank limits its scope of activities to the financing of the private sector while continuing to seek ways of improving the investment climate and supporting reform efforts.

Canada strongly supports this mandate and has continuously stressed its application. It has a strong interest in ensuring that nascent democratic regimes have access to the financing and advice needed for a sustainable transition to a market-oriented economy. In Board discussions in 2008, Canada took a strong stand in favour of continued limitation of the EBRD's activities in Turkmenistan, where the commitment to core democratic principles had remained particularly weak.

An update to the Turkmenistan country strategy was approved by the Board in May 2008. The Board agreed to allow the Bank to provide credit lines to state-owned banks for on-lending to small and medium-sized enterprises. Canada abstained on this decision as it was Canada's view that this credit provision would not promote market liberalization or a lessening of control by an undemocratic government that continues to operate under a central planning model.

Priority 2.2: Strong Transition Impact

Good progress

By helping to build the right conditions to attract private sector financing, the EBRD played an important role in the transition process leading to the accession of several of its borrowers to the EU in 2004 (EU8)⁵ and 2007.⁶ In December 2007, a significant milestone was achieved when the Czech Republic graduated from the EBRD. In November 2008, the Governors voted in favour of Turkey's request to become a country of operations at the EBRD. Canada supported the change in Turkey's membership status from "member" country to "country of operations."

As part of the Bank's CRR3, its business model for 2006–2010, Governors from the EU8 countries committed to graduate from EBRD operations by 2010. As such, in 2008 Canada encouraged the Bank to review its indicators of transition impact to better take into account the characteristics of early transition economies. The Office of the Chief Economist (OCE) is currently reviewing the transition indicators to better reflect the specificities of these economies.

Canada is very concerned that the financial crisis may reverse the progress made on transition. In its operational response to the crisis, the Board of Directors agreed to address the needs throughout the region, without questioning graduation. The OCE is reviewing the meaning of transition given the severe impact of the financial crisis on countries with high transition scores. Once the Bank is able to better understand the impact of the crisis on transition, it may be necessary to reassess the suitability of the Bank ceasing to do new business in the remaining seven countries of the EU8 by 2010, as set out in its CRR3. While these countries are well advanced in transition and benefit from EU membership, to cease doing new business may jeopardize the Bank's previous efforts to foster transition towards market economies in these countries.

Over the course of the next year, the Bank will attempt to determine how much progress its remaining countries of operations have made in the transition to market-oriented economies.

New Priority

Cooperation With Other International Financial Institutions

The financial crisis has increased the need for close cooperation between international financial institutions (IFIs) in order to provide a rapid and coherent response incorporating effective policy advice and financing. The Bank has limited resources, but it has built up deep local knowledge through its presence in the region and credibility with key stakeholders, governments and market players. As such, the Bank and other IFIs, particularly the International Finance Corporation (IFC), have an important role to play in developing innovative ways to mitigate the impact of the financial crisis on the private sector.

3. Environmental Sustainability and Gender Equality

Good progress

Environmental and social issues are increasingly regarded as fundamentally interconnected with long-term economic and political sustainability, as well as quality of life. Canada has an interest in promoting sustainability in the region as a means of fostering a strong global economy. Canada is therefore a strong proponent of sustainable best practices with respect to the EBRD's investments.

The current Environmental and Social Policy was approved by the Board in May 2008 and implemented in November 2008. The review took place throughout 2007–08. A round of public consultations outlining key topics was held with non-governmental organizations, other financial institutions, the World Health Organization, the International Labour Organization and indigenous peoples' representatives.

In 2008, EBRD President Thomas Mirow joined nearly 100 other leaders across the world in accepting the MDG3 (Millennium Development Goal) Gender Equality Torch from the Government of Denmark. The MDG3 Torch Initiative campaign commits political leaders, private sector representatives, international organizations, influential non-governmental organizations and prominent individuals to accelerate progress in achieving the MDGs.

By accepting a torch, President Mirow committed to implement a Gender Action Plan in the Bank's countries of operations, to promote greater opportunities for women—increasing the economic participation of women in the private sector, including in decision-making roles, through EBRD projects, staff and clients—and to mitigate gender inequalities in the region.

EBRD environmental and social priorities include:

• Fully integrating environmental and social considerations (e.g. health and safety, labour and community issues) into the project cycle and ensuring that each project considered for financing undergoes environmental and social appraisal.
• Promoting environmental investments across a variety of sectors to achieve resource efficiency, cleaner production processes, biodiversity and best practice in environmental management.
• Financing projects with clear environmental objectives, such as better water and waste water management, energy efficiency and renewable energy.
• Working in partnership with other institutions to address regional and global environmental issues.

As a result of representation by Canada and like-minded donors, the EBRD made a commitment to incorporate gender equality in its operations. The EBRD's Gender Working Group, which includes numerous Directors from different departments, developed a Gender Action Plan. Canada was instrumental in having €1 million earmarked for gender equality projects under the Shareholder Fund, which will assist the Gender Working Group to carry out its tasks. €270,000 has already been committed to the hiring of two gender specialists.

Annex 1—2008 Governor's Speech

Statement by Ted Menzies,
Temporary Alternate Governor for Canada,
at the EBRD Annual Meeting
Kiev, Ukraine, on Monday, May 19, 2008

It is a pleasure to address you here in Kiev, a beautiful city steeped in culture and tradition. I want to express my appreciation to the Government of Ukraine and to the City of Kiev for graciously hosting the 17th Annual Meeting of the EBRD.

Let me begin by thanking President Jean Lemierre for eight years of extraordinary leadership. His determination and vision have provided a solid foundation for the ongoing relevance of the institution, as well as its strong financial success. He is also a great friend of Canada and we will be pleased to see him again in June.

This year's meeting takes place in an environment of global uncertainty because of the current turmoil in financial markets and soaring food prices. The latter threatens to reverse many of the gains we have made in promoting prosperity in this and other regions over the last decade.

Fortunately, the EBRD has reported very strong results again this year both in its financial performance and, more importantly, in its transition impact. The decision on net income in 2007 provides the basis for an allocation Canada is pleased to support. The package ensures that the Bank's capital will be used effectively and in line with its mandate. The Shareholder Fund will allow the Bank to be more active in countries and sectors where it is additional and the projects generate higher transition impact. And, we are pleased to be making a one-time contribution to the completion of the confinement of the Chernobyl site.

Another resolution before us concerns the process for considering the request by Turkey to become a country of operations. Canada welcomes the consensus approach of the resolution, and we look forward to a recommendation from the Board of Directors.

This past year also saw the first graduation of a country of operations, the Czech Republic. We congratulate them and we look forward to seeing more countries graduate over the next two years.

Let me turn to the issues Canada believes the Bank should focus on:

First, transition impact, of course, is fundamental.

We all agree that many challenges remain in the Bank's countries of operations. As the demand for its support remains strong, the Bank can be selective and continue to apply rigorously its three pillars of additionality, sound banking, and transition impact. We believe that good governance and integrity are core determinants of transition impact. With a waning commitment to democratic reforms in some parts of the region, the EBRD should increasingly focus on projects where it can effect a bottom-up change by identifying clients with a potential to be industry trend-setters in business and environmental conduct.

We support the various steps taken towards a renewed effort in the Early Transition Countries. The risks are high but the potential rewards, not only in financial terms, justify the risks. Canada strongly supports the Bank's efforts in policy dialogue and institutional reform to build the foundations for a strong market economy in these countries.

The Bank's new Environment and Social Policy will further enhance our transition impact in the region. The process of public consultation demonstrates the Bank's commitment to engage with stakeholders. Canada sees the inclusion of gender equality in this new policy as setting best practice for project finance and hopes that this inclusion demonstrates the bank's overall commitment to incorporating gender equality across the Bank.

Second, the new strategic framework is critical.

As I mentioned, Canada is pleased with this year's progress for reviewing the allocation of net income and the adoption of a strategic operational framework, including the creation of a strategic reserve. Its adoption will ensure the sustainability of the Bank's business model over the medium-term.

Third, the Bank should set a good governance example.

The Bank, appropriately, requires high standards of governance from its partners. It can set a first-class example in all aspects of its own governance, from compliance to risk management, from Board decision-making to the role of Governors. Today, we will elect a new president of the EBRD and we congratulate him in advance. However, Canada favours a transparent, open and merit-based process for the selection of the heads of international institutions.

In addition to the priorities I have just outlined, three emerging policy matters deserve to be mentioned. First, the current turmoil in financial markets raises issues about appropriate regulatory structures. At their Spring Meeting, G7 Finance Ministers committed to reviewing their national regulatory frameworks in order to promote greater stability. We would encourage national authorities in the Bank's countries of operation to do the same.

Secondly, food price increases are an opportunity to reduce barriers to promote competition in the food sector. In particular, there is a huge opportunity to increase food production in Ukraine, Russia and Kazakhstan.

Finally, the EBRD has emerged as a leader on climate change issues by successfully engaging in mitigation projects and developing the Sustainable Energy Initiative. The experience the Bank has gained will be invaluable as the international community looks for ways to deal with the effects of climate change.

In concluding, having briefly outlined Canada's priorities, I want again to welcome Thomas Mirow. Canada looks forward to working with him.

He will be pleased to hear that Canada is committed to working with the EBRD to ensure the continued economic growth of the region. In the current uncertain environment, where there is a possibility of a backlash against the very ideals that led to the EBRD's creation, we must work together to preserve and build on our collective accomplishments. A strong, credible and effective EBRD will play a critical role in facilitating the international cooperation needed to achieve that goal.

I wish to thank the Board of Directors, President Jean Lemierre, and the staff of the Bank for a year of considerable accomplishments.

Annex 2—Summary of the Transition Report

The Transition Report is an annual publication of the EBRD that charts the progress of transition towards a market economy in each of the Bank's countries of operations. The 2008 report presents the main economic and reform developments in those countries from 2007 to mid-2008. The special theme of the 2008 Transition Report is growth. Using various data sources, the report looks at the role of competition policy, education and export structure in shaping countries' long-term growth performance, and examines the experience and potential role of industrial policy in the region.

Macroeconomic Overview and Reform Progress

With real gross domestic product (GDP) growing by 7.5 per cent on average in 2007, the transition countries experienced their strongest economic growth since transition began in 1991. While in the first half of 2008 growth continued to be strong, signs of a slowdown became clear in the third quarter as the financial turmoil hit several countries with full force in October 2008. With output in the world's most advanced regions expected to remain flat or even fall in the second half of 2008 and in 2009, the EBRD expects GDP growth in the region to fall to 6.3 per cent in 2008 and to 3.5 per cent in 2009.⁷

In 2007, inflation became a threat to macroeconomic stability and sustainable growth, reversing the trend of previous years. Significant commodity price increases since mid-2007, capacity constraints in the labour market and inadequate fiscal policy explain the sharp rise in inflation. Although commodity prices have sharply declined recently, core inflation will be more challenging to reduce. While capacity constraints should ease as growth slows, labour market tightness may remain a challenge in the medium term as demographic factors and emigration weigh on labour supply in the region.

The Bank tracks reform developments in 29 transition countries through a set of nine transition indicators. These cover four main elements of a market economy: markets and trade, enterprises, financial institutions and infrastructure. Notwithstanding the context of macroeconomic challenges outlined above, the EBRD reports progress in the reform process. As shown in the table below, the Bank reports 22 transition score upgrades in 14 countries and no downgrades in 2008. The higher number of upgrades compared to 2007 suggests that there was no slackening in the pace of transition in 2008. However, while there was no serious backtracking on reform in any transition country, there have been worrying instances of the state taking a more intrusive role in key sectors of the economy, notably in Russia.

The regional variation in upgrades is similar to previous years, with significant advances in Southeastern Europe and, to a lesser extent, in the Commonwealth of Independent States and Mongolia. Little discernible progress was made in Central Eastern Europe and the Baltic States, which can be explained by the so-called "reform fatigue" that set in after EU accession in 2004. In all cases, market-deepening reforms (e.g. privatization of larger enterprises and strengthening of financial institutions) and market-sustaining reforms (e.g. governance of enterprises, development of institutions to protect and promote competition) are still needed.

Table 3
Progress in Transition in EBRD Countries of Operations

			Enterprises			Markets and trade			Financial institutions		Infrastructure
Countries	Population (millions, mid-2008)	Private sector share of GDP in %, mid-2008 (EBRD estimate)	Large-scale privatization	Small-scale privatization	Governance and enterprise restructuring	Price liberalization	Trade and foreign exchange system	Competition policy	Banking reform and interest rate liberalization	Securities markets and non-bank financial institutions	Overall infrastructure reform
Albania	3.2	75	3+↑	4	2+	4+	4+	2	3↑	2-	2+
Armenia	3.2	75	4-	4	2+	4+	4+	2+	3-	2+↑	3-↑
Azerbaijan	8.4	75	2	4-	2	4	4	2	2+	2-	2
Belarus	9.7	30↑	2-↑	2+	2-↑	3-	2+	2	2	2	1+
Bosnia and Herzegovina	3.8	60	3	3	2	4	4↑	2	3↑	2-	2+
Bulgaria	7.6	75	4	4	3-	4	4+	3↑	4	3	3
Croatia	4.4	70	3+	4+	3	4	4+	3-	4	3	3
Estonia	1.3	80	4	4+	4-	4+	4+	4-	4	4-	3+
FYR Macedonia	2.0	70↑	3+	4	3-	4+	4+	2+	3↑	2+	2+
Georgia	4.5	75	4	4	2+	4+	4+	2	3-	2-	2+
Hungary	10	80	4	4+	4-	4+	4+	3+	4	4	4-
Kazakhstan	15.7	70	3	4	2	4	4-	2	3	3-	3-
Kyrgyz Republic	5.1	75	4-	4	2	4+	4+	2	2+	2	2-
Latvia	2.3	70	4-	4+	3	4+	4+	3	4	3	3
Lithuania	3.4	75	4	4+	3	4+	4+	3+	4-	3+	3
Moldova	3.4	65	3	4↑	2	4	4+	2+	3	2	2+
Mongolia	2.7	75	3+	4	2	4+	4+	2+	3-	2+↑	2+↑
Montenegro	0.7	65	3+	4-	2	4	4	2-	3↑	2-	2
Poland	38	75	3+	4+	4-	4+	4+	3+	4-	4-	3+
Romania	21.7	70	4-	4-	3-	4+	4+	3-	3+	3↑	3+
Russia	142.2	65	3	4	2+	4	3+	2+	3-	3	3-
Serbia	9.91	60↑	3-	4-	2+	4	4-↑	2	3↑	2	2+↑
Slovak Republic	5.4	80	4	4+	4-	4+	4+	3+	4-	3	3
Slovenia	2.0	70	3	4+	3	4	4+	3	3+	3↑	3
Tajikistan	6.8	55	2+	4	2-	4-	3+	2-	2+	1	1+
Turkmenistan	6.7	25	1	2+↑	1	3-	2↑↑	1	1	1	1
Ukraine	46.6	65	3	4	2	4	4+↑↑	2+	3	3-	2+
Uzbekistan	26.0	45	3-	3+	2-	3-	2	2-	2-	2	2-
Note: The classification of transition indicators uses a scale from 1 to 4, where 1 implies little or no progress with reform and 4 implies a market economy. A rating of 4+ indicates the country has achieved standards and performance typical of advanced industrial economies. An arrow indicates change from the previous year. One arrow indicates a movement of one point (from 4 to 4+, for example) and two arrows a movement of two points. 1 Including Kosovo. Source: EBRD, Transition Report 2008: Growth in Transition.

Report Focus: "Growth in Transition"

While growth has been strong and largely sustained since the early 1990s, improving and sustaining growth potential over the longer term remains a major challenge for the transition region. Selective government intervention can substantially increase long-term growth prospects of the transition countries and help them catch up with the technological frontier.

The report argues that competition and the quality of education are two areas where policy can be particularly effective. It underlines the necessity for transition countries to ensure competition by continuing to remove entry and trade barriers for domestic and foreign firms by strengthening/ establishing transparent and effective competition agencies. It also emphasizes the importance for the transition countries to collectively invest more in the quality of all levels of education in order to improve the quality of skills available to the economy.

Experience suggests that countries that are successful exporters tend to grow faster that those that are not. As well, the composition of the export basket can have important implications for a country's future growth opportunities. The report considers two dimensions of structural transformation to export baskets that can foster growth: growing in existing sectors and moving to new sectors. The suitability of growing in existing sectors largely depends on how much scope there is to upgrade quality within the existing export basket and whether the basket is sophisticated enough relative to GDP per capita to sustain growth. On the other hand, moving from existing products to new products requires that the existing capabilities be easy to redeploy to alternative production. It is likely appropriate for countries in that situation to use industrial policies focusing on providing the sector-specific public goods that emerging activities require.

In light of this analysis, the role for industrial policies in stimulating growth was examined. Any industrial policy must have at least one of the two following broad aims: 1) improve the efficiency of individual firms and sectors, which usually involves restructuring and investments, and 2) achieve structural change using policies that favour more dynamic and productive activities generally, irrespective of the sector or industry in question. Policies can either be horizontal (i.e. providing the framework in which firms and industries operate and where market mechanisms ultimately determine survival and prosperity) or vertical (i.e. targeted at specific firms, industries or sectors).

The report underlines that horizontal policies to support investments and innovation are important tools in the policy armoury. It concludes that in transition countries where market failures and other constraints are significant, there can be justification for also using targeted or vertical policies. Targeted policies drawing on public resources can be helpful in promoting the growth of new activities by improving credit and infrastructure in particular. However, the difference between success and failure with this type of intervention comes down to the detailed design of the policy and its effective implementation. As such, vertical, or targeted, industrial policies are likely to be far more problematic the weaker the country's institutional environment.

Annex 3—CIDA Programming in EBRD Countries of Operations

In order to increase the effectiveness of its programming, CIDA is focusing its efforts on a limited number of countries in the region. Efforts in the region are therefore concentrated in Ukraine, which is the main country of operation. CIDA also has active bilateral programming in the Balkans (Bosnia and Herzegovina, Serbia, and Montenegro), Tajikistan and Russia. The timeline for disengaging from the Balkans and the South Caucasus (Armenia, Azerbaijan and Georgia) is 2010. The highlights of CIDA's programming in EBRD countries of operations can be found below.

Ukraine—Since 1991, Canada has provided C$367 million in technical assistance to Ukraine. The goal of CIDA's bilateral Ukraine Program is to strengthen democracy and further Ukraine's integration into the global economy while improving economic opportunities for its citizens. Current programming builds on past efforts and focuses on democratic governance and private sector development. The latter will focus on two sub-sectors: creating an enabling environment and promoting entrepreneurship in order to increase the competitiveness of Ukrainian small and medium-sized enterprises, especially agricultural producers, in domestic and international markets.

Russia—To date, Canadian technical cooperation programming expenditures in Russia total over C$360 million. Current CIDA programming in Russia is mostly focused on governance, in support of public administration reforms, rule of law and civil society.

Balkans—Since 1990, CIDA has disbursed over C$540 million in funding to the Balkans for approximately 800 projects. The program is focusing its efforts in countries that are key to regional stability: Bosnia and Herzegovina and Serbia. CIDA's Balkans Program has shifted from post-conflict technical assistance to institutional capacity building, and is directed at initiatives that contribute to public sector reform and enhance social capital in the areas of rule of law, health and education. Gender, youth, environment and refugees are cross-cutting issues being addressed by these investments. CIDA is planning to disengage from the Balkans by 2010.

South Caucasus—CIDA has been present in the South Caucasus region since 1992, lending its support to initiatives aimed at improving governance structures and institutional capacity, strengthening civil society, promoting peace and security, and enhancing respect for human rights and democracy. To date, CIDA has disbursed over C$60 million in assistance to the region. The majority of funding has been allocated through responsive programming, with remaining funds provided via humanitarian assistance grants and the Canada Fund for Local Initiatives. Georgia has received C$33 million, which represents the majority of CIDA'S assistance. CIDA is planning to disengage from the South Caucasus by 2011.

Tajikistan—Canada has had a presence in Tajikistan since 1994, working with its partners to reduce instability through poverty alleviation, particularly in rural areas. Tajikistan's openness to cooperation with aid partners also allows Canada to contribute to regional security in Central Asia. The Tajikistan Country Strategy focuses on governance and private sector development within the broader realm of agrarian reform. CIDA's assistance program for Tajikistan focuses on agrarian reform in rural areas, where the majority of the population lives. CIDA's approach is to foster local ownership and leadership. At present, Canadian support targets democratization and public sector capacity building in rural agrarian reform as well as the promotion of rural entrepreneurship and access to markets for rural producers.

Europe Regional Program (ERP)—The ERP works with selected multilateral and bilateral institutional partners that are addressing issues of regional and trans-boundary interests. The ERP collaborates with the EBRD and the Organization for Security and Co-operation in Europe in the areas of governance, private sector development and environment, with gender equality as a cross-cutting theme. The ERP helps co-ordinate and facilitate program activities undertaken by geographic programs, and collaborates closely with other government departments to ensure policy coherence and a whole-of-government approach. The uncommitted balance of the $8-million EBRD-CIDA Canada Fund is slightly over $2 million and is due to close March 1, 2010.

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¹ Article 1, Agreement establishing the European Bank for Reconstruction and Development.

² Turkey became a country of operations in October 2008.

³ This amounts to C$7.8 million to C$390 million, based on the 2008 average exchange rate.

⁴ The CRR3 lays out the Bank's strategic direction for 2006 to 2010.

⁵ The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic and Slovenia.

⁶ Bulgaria and Romania.

⁷ As of the end of October 2008.

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