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EBRD steps up pace of investments

09 March 2007 12:26 (UTC +04:00)

The EBRD signed a record number of projects across its countries of operations in 2006, making an unprecedented level of investment and promoting further the process of economic and financial transformation by boosting its equity participations, EBRD Office in Baku told APA-Economics.
Investments grew particularly strongly in Russia. Throughout the region, the Bank increased its emphasis on projects that support energy efficiency and the development of sustainable energy sources. The EBRD also stepped up its programme of local currency funding and lending.
The EBRDâ€™s total investments in 2006 rose to â‚¬4.9 billion from â‚¬4.3 billion a year earlier and there were a record 301 projects, compared with 276 in 2005. In 2006, 167 stand-alone projects were signed and 134 were made under framework agreements. The methodology for calculating the number of projects has been changed to include individual projects signed under framework (multi-project) agreements, as well as independent projects. The old system used a weighted measure that assigned proportional values rather than counting each sub-project of a framework separately. Under this new methodology, there were 156 standalone projects in 2005, compared with the 151 previously reported.
The number of equity investment projects rose to 64, from 61 in 2005, while in volume terms equity investments rose by 76 per cent to â‚¬1.0 billion, up from â‚¬572 million in 2005.
The Bank, set up in 1991 to help the transition to the market economy of countries in central Europe and the former Soviet Union, has now invested a total â‚¬33.3 billion since its inception. The total amount of investment mobilized in the region, including funds raised via commercial co-financing, has now exceeded â‚¬100 billion, reaching â‚¬102.9 billion, compared with â‚¬94.4 billion at the end of 2005.
The EBRDâ€™s 2006 earnings rose to â‚¬2.4 billion from a previous â‚¬1.5 billion, mainly as a result of the realisation of previous equity investments. This allowed for a significant addition to reserves to support future business activities. Earnings also included nearly â‚¬800 million in unrealised gains on share holdings, leaving around â‚¬1.6 billion in realised profit.
Reserves rose to â‚¬7.0 billion at the end of 2006 from â‚¬4.7 billion a year earlier. Future earnings remain vulnerable to changes in the economic environment and in financial markets.
In the course of 2006, the EBRD expanded its geographic reach, with Mongolia joining the Bank as a country of operation last October. Following its independence, Montenegro also became a separate country of operation, bringing to 29 the number of countries where the EBRD is active.
Last year the Bank unveiled its strategy for the next five years, which foresees a shift in its investments further to the east and south of its areas of operations. This will result in a focus of activities on Russia, Ukraine, Central Asia, the Caucasus, the Western Balkans and South East Europe along with a decline in activity in Central Europe.
This trend was reflected in Russia, where investments rose to â‚¬1.9 billion from â‚¬1.1 billion and spanned right across the country. Three quarters of the Bankâ€™s investments were outside the cities of Moscow and St Petersburg.
Russian commitments represented 38 per cent of total EBRD business volume in 2006, compared with 26 per cent the previous year. In support of the regional and sector diversification of the economy, the Bank doubled its direct investments in the industrial sector and contributed to strengthening and consolidating the Russian financial sector. 75 per cent of investments in Russia last year were with Russian-owned companies.
The Bank trebled its equity investments in Russia. These included a stake in JSC Concern Sitronics, Russiaâ€™s largest high-tech industrial conglomerate, a transaction underlining the Bankâ€™s commitment to investments promoting the commercialization of Russian technology. It also took a 20 per cent stake in the countryâ€™s first budget airline, Sky Express.
The rise in EBRD investments in Russia coincided with a doubling of Bank staff in Moscow and plans to open three new regional offices in Russia in 2007 in the South, in the Volga region and in Siberia.
Investments in Central Asia, south-eastern Europe and Western CIS and the Caucasus took a 48 per cent share of overall business volume. Total investments of â‚¬2.4 billion in this region were close to the record level achieved in 2005.
The share of investments in central Europe and the Baltics dipped to 14 per cent from 16 per cent, totaling â‚¬701 million. /APA-Economics/