BUCHAREST (Romania), October 5 (SeeNews) – The European Bank for Development and Reconstruction (EBRD), the European Investment Bank (EIB and the World Bank on Monday pledged to continue helping central and eastern European (CEE) countries face economic challenges and return to growth.
Despite signs that the grip of the economic crisis is easing and irrespective of country variations, lending to the real economy and small and medium businesses is still shrinking, non-performing loans are rising, bank recapitalization needs remain large and unemployment is increasing rapidly, the three international financing institutions (IFIs) said in a joint press release.
High-ranking officials from the three IFIs met in Istanbul, Turkey at the World Bank and International Monetary Fund Annual Meetings to present their first Joint Progress Report of a 24.5 billion euro ($35.8 million) Joint IFI Action Plan for 2009-2010 launched last February. The action plan is in support of banking systems and lending to the real economy in CEE.
The international lenders believe that economic recovery in the region will depend critically on private-sector growth, which will not re-emerge without lending to the real sector. This requires, in addition to vital funding, strengthening banks’ balance sheets, helping mitigate financial risks in the region and restructuring of private debt where necessary and possible.
It will be important to address the vulnerability of foreign exchange exposures, in tandem with the development of long-term local currency funding and capital markets, according to the joint statement.
By end-September the three IFIs have already commited 16.3 billion euro under their joint action plan.
($ = 0.6842 euro)