Natalie Jaresko, minister of finance


The crisis in Ukraine dominated discussions at the EBRD meeting, as the ongoing conflict with Russia has thrown neighbouring economies into turmoil and brought investment into Ukraine to a near standstill, decimating currency reserves and taking more than 5400 lives. Economists forecast high inflation and another recession for Ukraine in 2015 but modest recovery in 2016. In 2014, after a pro-EU parliament was elected in Kiev, an agreement was reached for an IMF bailout package of $17bn.

However, this is not enough, according to Ukraine’s minister of finance, Natalie Jaresko. The US-born Ukrainian investment banker has spent 23 years working in diplomacy and finance before being appointed as Ukraine's finance minister in late 2014. On top of an increase in aid, Ms Jaresko says numerous structural political and economic reforms are needed to rescue the country’s economy and revive investment. 

The first step in Ms Jaresko’s reform agenda is stabilising the financial and banking system. “By reaching an agreement with the IMF on the extended fund and facility in the first tranche [of $4.5bn], in March we doubled our reserves,” she says. This brought stability back to the hryvnia and stopped the outflow of deposits from the banking system. 

“The second step is reducing the state budget,” says Ms Jaresko. "We are also making very important choices about how we spend the limited funds we have; part of that is financing our national defence, which is 5% of our GDP for the first time in history. The situation in the east requires that.” 

“In energy, we need to reduce our reliance on Russian imports. We’ve done that, successfully moving to two-thirds from Europe, and one-third from Russia.” 

When it comes to corruption and transparency, Ms Jaresko says: “Anti-corruption flows through all our reforms, especially energy and fiscal reforms.” The government has established a new and well-funded national anti-corruption bureau with strong law enforcement powers, even against former officials and ministers. “In addition to serious policy changes, it is important that we re-institute fear. You need to be afraid to be corrupt – afraid you will be caught and jailed,” says Ms Jaresko.

Further reforms in the country are based around deregulation, privatisation and tax policy, all of which are aimed at improving the business climate. 

“Although Ukraine is experiencing a horrendous war with human, financial, and territorial costs, it is only on 7% of the territory. The other 93% of Ukraine is open and ready for business,” says Ms Jaresko. “The severe devaluation of our currency makes our exports even more competitive, and so Ukraine is now the single most interesting and competitive platform for manufacturers who want to export into the EU.”  

With regards to privatisation, opportunities are slated in the fields of energy, chemical and agricultural assets and infrastructure. “Ports, terminals and grain elevators are all on the privatisation list. IT, services and food processing are also key investment areas,” says Ms Jaresko.

As for the country's future, she says: “With the $1bn credit guarantee from the US and the additional promised $1bn credit guarantee in the next fiscal year, we are extremely grateful. I do believe the US and Europe should do more for Ukraine, however. If you compare the support package Ukraine received compared to Greece, on a per capita basis, it is 40 times less per person. 

“Ukraine is feeling imperialism on its back, and the Ukrainian people are right now what we call the ‘bulletproof jacket’ protecting Europe from a very difficult aggressor. It is critical that the world continues to support Ukraine.”


Stephane Bridé, minister of economy

Moldova, the small former soviet state landlocked between Ukraine and Romania, is pursuing broad reforms to its economy and investment climate despite facing significant obstacles. 

Europe’s poorest country, according to the UN, is likely to face some serious economic problems on the back of Russia’s recent recession. The country of 3.5 million people relies heavily on agriculture and food processing, with the sectors accounting for about 40% of its GDP. Meanwhile, remittances make up a further 25% – the highest proportion in the world – though this figure is projected to decrease to 20% of the GDP in 2015, according to Moldovan minister of economy Stephane Bridé. 

“In terms of challenges, I think that we have a lot of them,” says Mr Bridé. Russia, Moldova’s largest importer, placed embargoes on the country’s wine and agricultural products in 2013 and 2014 in response to its association agreement plans with the EU. Russian-Moldovan trade thus dropped 20%, while exports to the EU increased by 10%. “We have more or less transformed our Russian trade partners into European ones, and now Europe is our biggest trading partner,” says Mr Bridé.

Corruption and transparency issues, as well as a tight monetary policy that complicates access to credit and a lack of protection from external shocks, are also problems that the government is working to tackle, but this will take time, says Mr Bridé.

Appointed as minister of economy in February 2015 after establishing Grant Thornton offices in Moldova and leading numerous engagements for Moldovan banks and financial institutions, Mr Bridé, a French national, was awarded Moldovan citizenship and is now pursuing widespread national reforms. “The first priority is effectively continuing the improvement of the country's business climate and reform,” he says. Additional priorities include implementing the association agenda with the EU as part of Moldova’s association agreement and signing a new programme agreement with the IMF. 

“Moldova has made serious progress over the past year in the World Bank Doing Business rankings, moving up 19 positions [to 63rd],” says Mr Bride. Moldova additionally has one of the lowest income tax rates in Europe at 12%. Further business incentives, according to Mr Bridé, include a one-stop shop for start-ups, the capability to set up a company in 24 hours, skilled and low-cost labour, and several free economic zones.  

Moldova is forecast to experience a 10% decrease in exports and 15% decrease in imports in 2015, but Mr Bridé believes that after this critical year of transition the country will return to “a certain trend of growth”.   


Janis Reirs, finance minister 

Latvia has been on something of an economic rollercoaster since its joining of the EU in 2004. Between 2004 and 2007 Latvia’s economy grew by an astonishing 50%, but the country took a severe blow with the recession of 2008. Since then, following IMF and EU bailouts, the Baltic country of 2 million people has implemented broad austerity measures, and has since – in 2013 – become Europe's fastest growing economy. Following the adoption of the euro in 2014, a move that was not universally popular within the country, growth has been stable – ratings agencies raised Latvia’s credit rating back to pre-crisis levels in mid-2014 – but unemployment remains high. According to Latvian finance minister Janis Reirs, the country is working hard to improve the business climate and pursue FDI to bring about further economic growth. 

“The World Bank’s Doing Business report ranks Latvia 23rd, ahead of Japan, the Netherlands, France and Belgium,” says Mr Reirs. This comes on the back of the government implementing a range of policies to facilitate company registration, licensing, paying taxes and obtaining credit for foreign businesses. 

Mr Reirs’ top priority in terms of FDI is attracting investment in sectors with the highest export and innovation potential, namely medium- and high-tech industries. To help with this, the Investment and Development Agency of Latvia is implementing its Polaris scheme – an approach linking public and private sectors and academia – in order to assist investors in pursuing their projects from inception to implementation. 

Latvia's services sector is its biggest source of FDI, and several factors contribute to this. “The combination of a well-educated workforce, a highly developed infrastructure and the great location and connectivity of Latvia have made it the perfect place for global business services,” says Mr Riers. Hosting leading names such as Statoil, Cabot, Cytec and Accenture, Latvia's services sector employs more than 5000 people.

Manufacturing, real estate and retail are also strong sources of FDI in the country, while projects are in development in the fields of mineral exploration, renewable energy and the entertainment industry. EU investment accounts for 69% of Latvia’s FDI.

Of the challenges facing the entire Baltic region following the imposition of sanctions on Russia by many Western countries, Mr Riers says: “In 2014 Latvia received €355m in FDI, less than half the amount received in 2013.” This slowing of FDI inflow has been caused by several problems, according to Mr Reirs. “The legal protection of minority shareholders is weak, dealing with construction permits is very time consuming, and unfortunately, insolvency proceedings are not fully transparent," he says. "However, geopolitical tensions remain the key negative factor hindering investors’ activities.”


Rimantas Šadžius, finance minister

Lithuania, like its northern neighbour Latvia, has witnessed both significant economic growth and turmoil in the past few years. Lithuania’s economy has been one of the fastest-growing in Europe, a strong comeback after suffering deep setbacks and a 15% decrease in gross domestic product during the 2008 financial crisis. On January 1, 2015, Lithuania adopted the euro, a contentious move within the country that minister of finance, Rimantas Šadžius, says was vital to its economic future.

“We are looking at further integration into the eurozone, which is extremely important for us,” Mr Šadžius says. “About 46% of Lithuanian goods are exported to eurozone countries.” The minister points out economic setbacks coming from Russia’s recession amid geopolitical instability and sanctions. “In 2014, trade with Russia made up almost 20% of all exports. The International Monetary Fund estimated that an economic downturn in Russia of 3.5% this year would cause 1% loss of real GDP for Lithuania.

“We had to reorient export flows to other destinations, so the eurozone was very important. It is an extremely important factor also for investors, whom we need badly.”

Lithuania ranks 24th in the World Bank’s Ease of Doing Business ranking, a position Mr Šadžius attributes to a dedicated investment ecosystem, offering competitive labour and land costs, highly skilled talent, efficient company registration procedures, low tax rates, and reliable infrastructure. It is also geographically well positioned, and with a population of 3 million, has a larger domestic market than neighbouring Latvia and Estonia. “We also have the fastest broadband in the EU and seven free economic zones across the country,” the minister says.

“The future of Lithuanian exports is in services, especially IT and associated services,” Mr Šadžius says. “This is why we are a popular destination for data centres. Barclays and Western Union have data centres here.”

Lithuania aims to become a hub for innovation by 2020, and is pursuing investment in IT services, consulting, finance, logistics, and software development. Multinational companies IBM, Microsoft, Barclays, Siemens, SEB and AIG already have established presences in Lithuania.

When asked about security concerning geopolitical conflict, Mr Šadžius refers to Lithuania’s membership in NATO, the EU, the eurozone, and the economic and monetary union. “To respond to the external risks,” he says, “we had to increase our defence spending. From 2014 to 2015, our defence spending increased by 38%. Any investor can be sure it is equally safe to invest in Lithuania as Poland or Germany.”

Noteworthy projects include the recently built $128m LNG terminal operated by Statoil in the Baltic Sea, the upcoming development of Klaipeda seaport, and Rail Baltic, part of the construction of a single European railway line whose price tag stands between $4bn and $5bn. A nuclear power plant is also under negotiation, with Japanese firm Hitachi already providing the reactors.

“We want to be among the five fastest-growing European economies, and I’m sure we will do this, as long as we can explain to investors the benefits of coming to Lithuania,” Mr Šadžius says.