After Ukraine shock, EBRD reaches out to Cyprus| MENAFN.COM

Monday, 04 July 2022 11:33 GMT

After Ukraine shock, EBRD reaches out to Cyprus

(MENAFN- AFP) The EBRD development bank Thursday concluded an annual conference dominated by its grim economic assessment of the Ukraine-Russia crisis by making strides towards investing in troubled nations Cyprus and Libya.

A day after the EBRD forecast a deeper Ukraine recession than many had thought possible and warned of contagion in Russia and beyond, the bank agreed to begin investing in bailed-out eurozone nation Cyprus and took a major step towards lending to strife-ridden Libya.

"This has been a very important annual meeting," EBRD President Suma Chakrabarti told a press conference at the end of the two-day conference in Warsaw.

"We've ensured that the EBRD is extremely well-positioned to support the economies of the regions where we work," added the former senior British civil servant.

His comments came one day after the European Bank for Reconstruction and Development said it expected Ukraine to tumble into recession in 2014 with a contraction of 7.0 percent -- and to deliver zero growth next year.

At the start of this year, before the outbreak of the country's crisis with Russia, the EBRD had forecast that Ukraine's economy would grow by 1.5 percent in 2014.

Russia meanwhile on Thursday reported a sharp slowdown to its own economic growth in the first quarter that analysts attributed to fallout from the raging crisis in neighbouring Ukraine, where pro-Russian separatists have been waging an insurgency in the east of the country.

The state statistics agency said the Russian economy grew by 0.9 percent between January and March compared with the same period last year.

- Cyprus, Libya in EBRD sights -

The EBRD was founded in 1991 to help ex-Soviet bloc countries such as Ukraine and conference host Poland make the transition to free-market economies and democracy.

In recent years, it has expanded its reach to invest in Turkey, Jordan and countries in north Africa.

On Thursday, the bank announced that it will begin investing some half a billion euros in Cyprus to assist the island nation to recover from a "severe economic crisis".

EBRD investments up until 2020 will complement Cyprus' international bailout programme that is worth 10 billion euros ($13.7 billion).

Chakrabarti said the bank could expect to invest between 500 and 700 million euros in Cyprus through 2020 but stressed that the amount was only indicative at this stage.

The EBRD noted that "the Cypriot economy remains mired in a deep recession that emerged after a boom period between 2004, when Cyprus joined the EU, and 2008, when it adopted the euro".

Also on Thursday, the bank voted in favour of Libya becoming a member country, a move that could see it eventually receive EBRD financing.

Libyan authorities last year sought EBRD membership as the country seeks to "implement programmes of economic reform and would contribute to its economic growth", the London-based bank said in a statement.

Libya last week confirmed the appointment of Ahmed Miitig as the new premier after a chaotic vote highlighting tensions between Islamists and liberals in a country sapped by violence nearly three years after the overthrow of Moamer Kadhafi.

- Ukraine, Russia shedding investment -

Just 10 days before a key presidential election in Ukraine, its interim leaders were Thursday battling to keep the country together despite a European peace push, facing a bloody insurrection in the east and a tense standoff with Russia.

On Monday, the Kiev government joined the EBRD and economic grouping the OECD in signing a Memorandum of Understanding that promises an anti-corruption drive.

The EBRD insists that tackling corruption in Ukraine has become increasingly urgent as the country struggles for foreign investment along with Russia.

In Warsaw, the bank said that private-sector capital outflows in Russia had reached $64 billion (47 billion euros) in only the first quarter of this year, exceeding the annual amount for 2013.

The EBRD's latest annual gathering took place almost 25 years after the fall of the Berlin Wall and a decade since eight former communist nations, including Poland, became members of the European Union.

The institution has 66 shareholders, comprising 64 countries plus the European Union and the European Investment Bank.

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