At a time when development aid is falling and donor governments are questioning its cost-effectiveness, an EBRD report released shows that grant funding channeled via the EBRD clearly meets donors' goal of boosting economic development.
Noreen Doyle, the EBRD First Vice President, said grants from donors pave the way for subsequent project financing by the EBRD and others and account for a large part of the Bank's success in investing in central and eastern Europe.
Over the past decade, 650 million euros in donor grants have supported 35 billion euros in financing by the EBRD and its partners, said Fabrizio Saccomanni, the EBRD's Vice President with responsibility for donor relations. The EBRD uses the grants to help prepare EBRD projects and ensure their successful implementation. Grants also fund consultants to advise governments on necessary legal, regulatory and sectoral reforms that improve the investment climate.
Local financial institutions in which the EBRD invests are the main beneficiaries of this donor-funded advice. That is because new and improved financial intermediaries - such as banks, leasing and insurance companies - are fundamental to the transition to market economies.
In particular, donor funds have helped build up banking services for micro, small and medium-sized business, boosting credit availability for the entrepreneurial engines of local economies. Donor-funded expertise, combined with financing, also helps governments improve public services such as waste water, heating and power generation, and transport.
Donor commitment is increasingly important as the EBRD increases its investments in the seven poorest countries in its region: Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan.
UzReport, April 19, 2004