EBRD to invest in Greece to 2020

BRUSSELS - Agence France-Presse

The EBRD annouced that it will start investing in Greece on a temporary basis in response to a request from the Greek authorities in order for the bank to support reforms and return to economic growth. AFP Photo.

The European Bank for Reconstruction and Development (EBRD) said on March 3 it would begin funding critically needed investment in cash-strapped Greece as Athens nears the end of a massive bailout program.

The private-sector champion said the program would cover the next five years until 2020 but declined to give a figure for its potential investment after reports it could be as much as 1.0 billion euros.

“What we will be trying to do is to use the bank’s expertise to develop the private sector to promote growth,” EBRD president Suma Chakrabarti told a press conference in Brussels to announce the decision.

The move follows a request late last year by the previous center-right Greek government which agreed to tough austerity and reform commitments in return for a debt rescue worth 240 billion euros.

The new hard-left government of Alexis Tsipras won power in January however on a promise to reverse many of those reforms, especially privatization, and chart a post-bailout future with its skeptical international creditors.

Chakrabarti said the state sector in Greece was “still very dominant,” accounting for about 40 percent of the economy, and so the EBRD’s role would largely depend on future government policy.

“Whenever we invest in any country it is always on the back of a programme of reform to a more open economy,” he said.        

“What we are looking at is -- are they moving towards a more market-friendly system?”
       
The EBRD would do as much or as little as was possible, he said, without giving a figure.

“We just do not do that but the good news is that we are very well capitalized and we have headroom, no ceiling, no floor,” he said.

The European Bank for Reconstruction and Development was set up in 1991 to help fund the free-market transformation of the former communist states of eastern Europe.

Since then it has broadened its remit to all of Europe and neighboring areas, focusing on the private sector to deliver economic, social and political change.