EBRD funds target Ukraine, Balkans, Romania

The European Bank for Reconstruction and Development moved to calm investor fears over state intervention in Russia and outlined a new focus on Eastern Europe at its annual conference, reports Chris Mercer.

Jean Lemierre, EBRD president, agreed that investors had become increasingly nervous about Russia but moved to allay concerns, saying there were some successful and some difficult stories emerging.

"At the same time, President Putin a few days ago made a clear speech about the importance of investment and the necessity to reform the tax administration," said Lemierre.

He added that Russia was a very diversified country and would take a lot of hard work, yet there were a number of people employed in the capital market who remained committed to greater transparency.

The president's words will bring some comfort to all investor firms, including those involved in the food industry - now Russia's fastest growing industry outside of the energy sectors.

Lemierre said the EBRD also wanted to focus on emerging markets in the Ukraine and Balkans nations as well as Romania and Bulgaria, in recognition of their changing political climates and the planned EU membership of the latter two.

Again, this is good news for local food producers in view of the investment the EBRD has already made in these countries' food sectors.

The bank has handed out a number of loans to food processing firms in the last couple of years, including €9m to the Ukraine's largest malt house, €8 million to Macedonian food processor Zitoluks and sustained investment for Croatian food firm Agrokor.

The EBRD said it had invested €195m in 13 agribusiness projects in the Ukraine and €3.25 billion in more than 210 similar projects across the whole of Central and Eastern Europe and Commonwealth of Independent States.

Lemierre's confidence about development in Eastern Europe was contrasted with a thinly masked scepticism over the troubled climate in Uzbekistan.

The president condemned the indiscriminate killings that have marred the country in the last few weeks. From a business point of view, he said the EBRD recently held a meeting in Uzbek capital Tashkent "where we made a very strong point about the need for openness; openness to civil society, political parties, to neighbouring countries, to trade and investors".

The bank said in February it would lend €2.8m to a private brewer in the country, Mekhnat Pivo, but Lemierre warned the investment situation remained very low and that whilst the EBRD had maintained its engagement with the government, it had stopped investing in the public sector except for social reasons.

He said increased investment in Uzbekistan looked unlikely in the near future.