EBRD Seeks To Guide Ex-Soviet Bloc To Economic Recovery.

"The European Bank for Reconstruction and Development (EBRD) met Saturday to help guide crisis-hit Eastern Europe towards recovery and prevent a reversal of two decades of major economic reforms.... The bank had kicked off its two-day meeting Friday by revealing it would invest a record EUR7 billion into the embattled region by the end of this year. So far this year, it has ploughed a total of EUR2.3 billion, which is double the amount invested in the same period a year earlier...." [Agence France Presse (5/16)/Factiva]

The Observer adds that "...Eastern Europe's heady economic 'miracle' may never return, leaders from the region were warned this weekend.... EBRD President Thomas Mirow told ministers and central bankers that it would be 'unrealistic' to expect a repeat of the 'double-digit growth, record levels of investment and readily available finance', of recent years...." [The Observer (UK, 5/17)/Factiva]

Meanwhile, Reuters reports that "...calls on the EU for more direct help for its ailing eastern members and neighbors look futile and the bloc will likely continue to depend on the International Monetary Fund (IMF) to provide the main safety net.... Bankers and policymakers at this weekend's meeting of the EBRD complained that the EU's executive body and the European Central Bank should be doing more to backstop the region. [Yet] little the EU and ECB have said...indicates willingness to take a more leading role.... 'IMF funds are not enough,' Ukrainian Deputy Prime Minister Hryhory Nemyria said in an interview bemoaning greater access to cash for EU members like Hungary.... " [Reuters (5/18)/Factiva]

Bulgaria In Better Position Than Neighbors - EBRD

Bulgaria is financially more stable than some of its neighbors but its economy would be deeply affected by the global downturn, European Bank for Reconstruction and Development (EBRD) President Thomas Mirow said on Tuesday.

But analysts say years of budget surpluses and hefty fiscal and forex reserves protect Bulgaria in comparison with regional peers.

The EBRD will increase investment in Bulgaria by 25 percent to almost EUR 250 million. Nearly half of the funds will reach local banks to ease access to trade credit as banks are growing more reluctant to lend.

The EBRD will also finance energy and EU funds projects. The resources will be made available to companies that have proved their viability but have been pressed by the financial crisis. They will be supported to increase their productivity, Mirow explained.

However, Bulgaria's reliance on foreign capital places it in a vulnerable position, the International Monetary Fund (IMF) said Tuesday. The IMF suggests that Bulgarian authorities prioritize maintaining confidence in the country's banking system, which it describes as well-capitalized, liquid and highly profitable.

G20 Backs Rescue Funds Boost As Crisis Summit Looms.

G20 finance ministers promised money on Saturday to rescue troubled emerging market economies. Ministers from the world's largest economies also pledged to regulate hedge funds and start closer checks on credit ratings agencies to prevent a repeat of the financial crisis.

'We are committed to deliver the scale of sustained effort necessary to restore growth,' the ministers said in a statement promising extra money for the International Monetary Fund (IMF) and regional lenders such as the Asian Development Bank (ADB).

Besides the IMF and ADB, the G20 finance ministers said they would review the capital needs of African Development Bank (AfDB) and the Inter-American Development Bank (IDB) at the annual meeting this year and called on the European Bank for Reconstruction and Development (EBRD) to 'promptly review its statutory capital constraints to give leeway to interventions'. This was urgent because Eastern European economies are in crisis.

It has been reported that the technical details of the deal to provide the [IMF] with additional resources were not finalized at the weekend but Japan has already signed a deal with the fund to provide a loan worth $100 billion. The US is seeking to increase the funding by extending the New Arrangements to Borrow facility, under which 26 of the fund's members agreed in 1998 to lend it up to $50 billion at times of crisis.

Spain's portion of a possible $250 billion increase in funding for the IMF would be in the order of $3 billion, Spanish Finance Minister Pedro Solbes said Saturday. Solbes said the cash would come from central bank reserves.