EBRD Plans Active Work in Ukraine

EBRD President Jean Lemiere signed a credit line agreement with the Microfinancial Bank public corporation. The latter’s president Volker Renner noted that “the credit agreement will allow Microfinancial Bank to expand its investment scope using offices recently opened in Slavutych, Kharkiv, and Lviv; also, the office in Donetsk scheduled to start operating toward the end of this summer.” The Microfinancial Bank, opened in February 2001, has provided 222 loans through May of this year, totaling 3 million euros, including the smallest worth $110. The EBRD is actively cooperating with six Ukrainian banks. The Ukrainian economy needs foreign investment like never before, especially with regard to the small and medium businesses that are making initial their tentative steps. Without sufficient financial resources, they cannot show any progress,” Mr. Lemiere stressed. Obviously, neither the state with its permanent budget deficit nor domestic banks can supply the economy’s investment needs. Ukrsotsbank President Borys Tymonkin told The Day earlier that he did not see many credit prospects for Ukrainian banks, owing to a number of domestic economic problems and to the insignificant share of Ukrainian banking capital, meaning that external injections have to be made.

Mr. Lemiere also believes that the Ukrainian economy is on the way out of the deadlock after the past decade’s all-encompassing systemic crisis. “The destinies of your country are changing,” he stressed. “There was actual economic growth last year and the trend continues this year. The national currency remains stable. You have succeeded in restructuring your public debt. The amount collected as revenue has increased.” He went on to say that under the circumstances it is important to maintain and strengthen the emerging processes, and that EBRD intends to step up operations on the Ukrainian financial market. Indeed, the EBRD’s involvement in Ukraine shows a significant increment, currently showing the cumulative amount of 1.3 billion euros. Last year, the EBRD signed up for transactions totaling 293 million euros, 20% more than in 1999. This makes the EBRD the largest investor in the Ukrainian private sector. In Mr. Lemiere’s words, “We have just adopted a bank strategy for the next five years; it is obvious that Ukraine will occupy an increasingly important place in this strategy.”

Commenting on Ukraine’s current macroeconomic trends, describing them as “a solid basis for the future superstructure,” the EBRD president pointed to a number of problems, without solving which the Ukrainian economy could never be referred to as rejuvenated, let alone having a favorable investment climate. The said problems include clear and normal accounting standards, transparent economic processes, bettering consumer protection at the judicial level, favorable tax legislation and its adequate implementation, as well as the prevalence of the law over private interests.