More than two-thirds of the €32bn in debt owed to the European Bank for Reconstruction and Development (EBRD) sits in just 10 countries, and borrowers outside the continent make up a growing proportion of its loan book.
The EBRD was established in 1991 to support transition economies and private sector development in central and eastern Europe, following the collapse of the Soviet Union. Since then, it has extended the geographic remit of its operations to cover more than 35 countries from north Africa to central Asia.
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At year-end 2022, the bank — which is owned by a group of 71 countries, plus the EU and European Investment Bank — had disbursed loans to public and private borrowers in 40 countries worth a total of €31.86bn. Countries outside of Europe account for 30% of this loan portfolio, up from 10.8% a decade earlier.
Turkey is the multilateral bank’s biggest debtor for the seventh consecutive year. It owed the EBRD €4.89bn at the end of 2022, accounting for 15.4% of the bank’s outstanding loan portfolio. The EBRD’s investments in Turkey have focused on sustainable infrastructure, renewable power and urban regeneration. It stepped-up assistance this year with a €140m loan to expand Antalya’s airport and €600m in approved credit as part of a disaster response package following February’s deadly earthquakes in the country’s south-east.
In second place is Egypt, which owed the EBRD €2.56bn at the end of last year. North Africa’s biggest economy has become a magnet for foreign direct investment in recent years, ranking as 2022’s top destination for $1bn-plus projects in terms of capital investment, according to fDi Markets. However it also stands out for its reliance on multilateral funding. Its EBRD borrowings have tripled since 2017, and it is also the IMF’s second-biggest debtor, and the biggest World Bank borrower in the Middle East and Africa region.
Hot on its heels is Poland, with an outstanding balance of €2.52bn at the end of 2022. Last year, the EBRD invested €990m (via debt and equity) in the country — more than any year prior. It also invested a record amount in its fourth-biggest debtor, Ukraine, which at year-end owed the multilateral €1.95bn. A long-time supporter of the country, the EBRD claims to be Ukraine’s biggest institutional investor. Following Russia’s full-scale invasion of the country in February 2022, the bank pledged a further €3bn worth of support and has already mobilised more than €1.7bn in loans and grants for its railway and power industries.
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Of the EBRD’s 40 debtors, Romania saw the biggest jump in borrowings during 2022. The bank’s fifth-biggest debtor drew down another €319m in loans last year, bringing its total to €1.87bn. It is closely followed by neighbouring Serbia, which owes €1.84bn. A big focus of the EBRD’s lending in the Balkan country is expanding local bank funding for small and medium-sized enterprises (SMEs).
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In seventh place is Kazakhstan, which owed €1.82bn. Much of the EBRD’s activities in central Asia’s biggest economy have been channelled into infrastructure, agribusiness and SMEs. Next is Greece which owed €1.59bn — the EBRD started investing in the country in 2015 to help its public and private sector regain access to international financial markets following the government debt crisis which started in 2009.
Rounding out the top 10 are Morocco (€1.38bn) and Georgia (€927m) where the EBRD has played a leading role in liberalising the economy and improving its business climate.
One country to steadily slide down the EBRD’s loan book is Russia. In 2014 it was the bank’s biggest borrower, with a €3.5bn debt pile. At the end of 2022, it owed just €34m — the bank has made no new investments in Russia since the invasion of Crimea in 2014, and suspended any access to its resources in response to the invasion of Ukraine in 2022.
Overall, countries outside of Europe account for 30% of this loan portfolio, up from 10.8% a decade earlier.