EBRD TO INVEST USD250MN ANNUALLY IN BULGARIA
Jean Lemierre, President of EBRD, to the BANKER weeklyMr. Lemierre, your first visit to Bulgaria included a number of meetings with politicians and businessmen. Would you share your impressions?- I learnt quite a lot about Bulgaria and I believe I can now understand better why the country has a stable basis for its future development. Grounds for that are the fair state of macroeconomics, the political stability, the good bank sector.The energy sector and its improvement, and the financing of real economy offer great challenges. Financial mediation, i.e. the banks, the insurers and brokers, account for only 15% of the GDP, which is quite insufficient. This share should increase in order to facilitate the firms' access to credits and create working positions. Measures should be undertaken for reducing poverty, and raising the population's quality of life (for instance improve the water and sewage network and water supply, the recycling of wastes, transport, and other public utility services).This year the EBRD set up a record in terms of its investments in Bulgaria. What financing do you project for 2002 and under what projects?- By end-2002 we'll invest EUR200MN, double than last year and four times more than the average annual financing from the bank till now. This is a real jump and it is indicative of EBRD's great commitment to Bulgaria. In the future we intend to set aside for your country at least EUR200-250MN a year. The bulk of the money will be directed to the private sector. This means that in each euro we allocate to the private business, EUR2-3 ill be invested additionally. Thus, the invetsments through which we participate in Bulgaria's economy will probably reach EUR1BN a year. We could even do much more if signs appear that progress has been made in the judiciary. In addition to the judiciary which are the other problematic spheres that need improvement?- I like the word improvement, which you used. It shows direction. We know the present situation. Things are as they are, and they cannot be changed in a single day, but there should be a clear indication about the direction of development. The two key problems are the judiciary and the efficiency of the administrative system. According to me, these are the most important elements for the attraction of investments and the opening of working positions. Have you outlined new spheres of acivities towards which the EBRD will direct its attention and which are they?- During my meetings here we've discussed two main issues - investments and privatisation. We are considering investments in the telecom sector, connected with the divestment of the Bulgarian Telecommunication Company (BTC) and the second local GSM-operator GloBul. Within two weeks the EBRD Board of Governors will officially make a decision to acquire a EUR90MN share participation in the private company. I cannot yet say what stake in GloBul's capital would ensure that investment, because other shareholders will be attracted as well. A very important privatisation deal remains to be made in the bank sector and we are ready to consider eventual participation in the divesment of DSK Bank. During the conversation with Energy Minister Milko Kovachev we reached quite an important progress that will be reflected in EBRD's future projects. We have already negotiated our participation in the Energy 2 project. In a month we'll probably sign the agreement for a EUR113MN loan, earmarked for the rehabilitation of Maritsa Iztok 3.But the municipal sector is perhaps the most important new sphere for the EBRD. Therefore, I held meetings with the mayors of Bulgaria's two biggest cities. I'll go back to London with full awareness that there is great potential in assisting municipal projects through joint work with the EU and the funds of the pre-accession ISPA programme. The key moment for the EBRD is the municipalities' tariff policy - the price of transport services, water supply, etc. For each individual project we should find a reasonable solution to the question what the price of a certain service should be from the point of view of the investor and, what price would be affordable to customers. We'll have to find the appropriate attitude and reach a satisfactory compromise for everybody.During your meetings with ministers from the Government you got acquainted with the idea of setting up an investment fund for venture capital, to be financed by BGN100MN from the fiscal reserve. What is EBRD's attitude to such a project?- We have not discussed that specific issue, but I believe there is definitely a need of such a fund to finance investment projects. According to us, this is a good idea and the EBRD would readily discuss its participation in such an investment. But there is one condition - the private sector should be the major partner in the fund and various private investors should participate in it.