Luxembourg and the EBRD

Luxembourg and the EBRD

Cooperation between the EBRD and Luxembourg The EBRD and Luxembourg have collaborated extensively to support projects in the Western Balkans, the Caucasus and Central Asia, where the transition process is still at an early stage. Since 99, Luxembourg has contributed a total of 9.7 million in grant financing to support EBRD operations. EBRD/Luxembourg Technical Cooperation Fund Since 99, Luxembourg has provided 3.2 million through the EBRD/Luxembourg Technical Cooperation (TC) Fund to support the preparation and implementation of EBRD projects and to finance advisory services. Most of this grant financing is targeted towards the implementation of assignments across the EBRD s countries of operations. Luxembourg s contribution to EBRDmanaged funds Fund Amount ( million) Multilateral Carbon Credit Fund 0.0 Nuclear decommissioning funds 4.0 EBRD/Luxembourg TC Fund 3.2 Mongolia Cooperation Fund.0 Early Transition Countries Fund 0.5 Project Preparation Committee officers 0.5 Western Balkans Fund 0.5 Total 9.7 The EBRD/Luxembourg TC Fund has principally supported the Bank s TurnAround Management (TAM) programme (see Expert advice helps businesses ), municipal and environmental infrastructure projects, environmental action plans in connection with EBRD projects and the development of the financial sector. Many assignments have led directly to EBRDfinanced projects with a total project value of more than 280 million. For example, TC funding has been used to support a micro enterprise programme in Romania and the improvement of water services in Archangelsk, Russia. Luxembourg s contributions to the Multilateral Carbon Credit Fund will help countries to meet environmental targets under the Kyoto Protocol. Jean-Claude Juncker, Prime Minister and EBRD Governor for Luxembourg

Nuclear decommissioning funds Nuclear safety is a priority for both the EBRD and the international community. In 997 the Chernobyl Shelter Fund was established at the EBRD to finance the Shelter Implementation Plan (SIP). This programme aims to transform the sarcophagus over unit 4 at Chernobyl Nuclear Power Plant into a stable and environmentally safe system. To date, pledges from donors amount to about 800 million, including a contribution of 2.5 million from Luxembourg. Donor funding also supports international decommissioning support funds managed by the EBRD. The Ignalina International Decommissioning Support Fund (IDSF) funds decommissioning projects, such as spent fuel storage and radioactive waste treatment facilities. Lithuania s Ignalina nuclear power plant has been closed and Ignalina 2 will follow by 2009. Luxembourg has contributed.5 million to the Ignalina IDSF. Multilateral Carbon Credit Fund The EBRD and European Investment Bank agreed in May 2006 to establish a new fund to generate carbon credits. The Multilateral Carbon Credit Fund (MCCF) enables public and private sector participants to buy carbon credits from emission reduction projects financed by both institutions in the EBRD s countries of operations. Typical projects include industrial energy efficiency, fuel-switch, renewable energy (for example, biomass, wind and mini-hydro) and landfill projects. Luxembourg has contributed a grant of 0 million. Western Balkans Initiative As part of the EBRD s strategy of moving further south and east, the Bank launched a Western Balkans Initiative in May 2006. Eleven countries have committed 0 million in donor funds to boost private business investment and infrastructure development in Albania, Bosnia and Herzegovina, FYR Macedonia, Montenegro and Serbia (including Kosovo). Luxembourg has supported the initiative with a contribution of 500,000. Sustainable Energy Initiative In May 2006 the EBRD established the Sustainable Energy Initiative to invest up to.5 billion in energy efficiency projects over the next three years. The Bank will increase investment in energy efficiency measures in industrial projects that are readily costrecoverable and where the business case is clear. The initiative will also develop the feasibility of renewable technologies. Luxembourg has committed to this initiative. The EBRD values Luxembourg s continued support, especially for the Early Transition Countries, Western Balkans and carbon trading, which are priority areas for the Bank. Michael Williams, acting Vice President Risk Management

Sectors supported by Luxembourg s funding Geographical distribution of Luxembourg s funding Social services Energy Finance Environment Manufacturing (TAM) Expert advice helps businesses The TurnAround Management (TAM) programme employs experienced business leaders from industrialised countries to develop management and technical skills in the EBRD s region. Luxembourg has contributed. million to 5 TAM projects in Bulgaria, Hungary, the Kyrgyz Republic, Romania, Russia, Tajikistan, Ukraine and Uzbekistan. Luxembourg also funds two community projects in the Kyrgyz Republic and Tajikistan. These help very poor communities to use their existing resources better, thus reducing poverty and advancing economic and social development. Recently, Luxembourg agreed to provide an additional 200,000 to implement TAM activities in Bulgaria and Romania. Russia Regional South-eastern Europe 2 Central Asia 3 Hungary, Lithuania and Ukraine Refers to projects covering more than one country. 2 Includes Bulgaria, Romania and Serbia. 3 Includes the Kyrgyz Republic, Tajikistan and Uzbekistan. Giving a boost to the environment A Project Preparation Committee (PPC) was established in 993 to strengthen the link between donors and international financial institutions in preparing environmental investments. Luxembourg has provided over 450,000 to fund the activities of PPC officers located at the EBRD. The PPC officers have contributed to the establishment of a credit line for energy efficiency and renewable energy in Bulgaria, to the development of a biodiversity protection project in the Kyrgyz Republic and to the creation of an environment management system in the Former Yugoslav Republic (FYR) of Macedonia. The Business Advisory Services (BAS) programme works with small businesses to determine how they could improve with the help of local consultants. Luxembourg has provided 700,000 for BAS programmes in Bulgaria, Croatia and Russia. Since January 2000, a total of 672 projects have been undertaken with 64 enterprises in these countries, employing 322 local consultants.

ETC Fund In early 2004 the EBRD launched a new initiative to increase its activities in the seven poorest EBRD countries of operations; Luxembourg has committed 500,000 to this initiative. The Early Transition Countries (ETC) Fund aims to promote reform, enhance economic growth and improve the coordination of development efforts in the seven ETCs. It focuses on private sector development, particularly micro, small and medium-sized enterprises. Several financing instruments have been developed to address the needs of local entrepreneurs. These include micro-credit schemes and risk-sharing facilities. As of August 2006, the Bank had committed nearly 9.5 million of donor funding to implement 59 assignments in the ETCs. Small business lending in Moldova In April 2006 the EBRD launched a 2 million micro-lending framework in Moldova. Financing is provided to local commercial banks for onlending to micro and small enterprises (MSEs). Credit lines to local banks are accompanied by an intensive technical assistance programme which ensures that the banks develop the necessary skills to undertake MSE lending profitably. The ETC Fund has provided.3 million of TC funding to assist four partner banks. Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan. Mongolia Cooperation Fund The Mongolia Cooperation Fund (MCF) was set up in March 200 with 0.3 million of donor funding. The MCF uses EBRD expertise to address some of the country s most pressing needs. Together with Luxembourg s contribution of.0 million, grant funding has been provided by Japan, the Netherlands and Taipei China. As of August 2006, some 46 projects in Mongolia had received a total of 8.6 million in grants from the fund. TC projects have included support for aviation, financial institutions and the power sector. In 2006 Mongolia was admitted as a recipient country of EBRD financing. Putting a local shoe factory on a better footing Sinuous, based in Ulaanbaatar, was created in 998 by two former employees of the defunct Mongolian state shoe factory. When it requested TAM assistance, the company was still manufacturing basic footwear for the government and private individuals. However, it suffered from frequent cash flow problems. The TAM team, funded by the MCF, recommended several solutions for example, enlargement of the office space and rationalisation of the production line. They introduced a customer-oriented approach to improve products, sales and service, collected and analysed sales data and introduced new products for specific market segments with growth potential. In addition, they introduced a middle management level, allowing senior management to concentrate on strategy. Sales and profits increased threefold.

Working as a partner with Luxembourg In addition to donor funding, Luxembourg is a significant source of foreign direct investment in the EBRD s countries of operations. By the end of June 2006, Luxembourg had invested 77. million alongside EBRD investments, bringing the total project value to 306 million. Once other contributions are taken into account, the total value of projects with joint Luxembourg and EBRD involvement was.5 billion. Most of these deals were in the private sector. The adjoining tables show the countries and industries that have received most joint investment from the EBRD and Luxembourg. Trade Facilitation Programme The EBRD s Trade Facilitation Programme promotes cross-border trade by providing guarantees to international and local banks involved in supporting import/export trade. Since the start of the programme, the EBRD has financed more than 5,000 foreign trade transactions totalling over 2.4 billion. The programme can guarantee any genuine trade transaction to, from and within the Bank s countries of operations. Over 00 local banks and 600 international banks participate in the programme. Many companies from Luxembourg have benefited from this programme. Contacting us European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN Tel: +44 20 7338 6000 Fax: +44 20 7338 600 General enquiries about the EBRD Tel: +44 20 7338 6372 Email: generalenquiries@ebrd.com www.ebrd.com EBRD/Luxembourg investment by country Country Amount ( million) Regional 06 Hungary 87 Russia 7 Lithuania 28 Latvia 4 Total 306 Covering more than one country. EBRD/Luxembourg investment by industry Industry Amount ( million) Financial institutions 95 Infrastructure 8 Specialised industries 70 Manufacturing 60 Total 306 Includes agribusiness and property and tourism. The EBRD, owned by 6 countries and two intergovernmental institutions, aims to foster the transition from centrally planned to market economies in countries from central Europe to central Asia. Office of the Director for Luxembourg Tel: +44 20 7338 6436 Fax: +44 20 7338 6044 Project enquiries Tel: +44 20 7338 768 Fax: +44 20 7338 7380 Ref: 6850 Luxembourg and the EBRD, January 2007