Q: India became a new member of the European Bank for Reconstruction and Development [EBRD] in March. What does it mean for the bank?

A: It’s good to have one of the world’s largest economies, the world’s largest democracy, as a member of the bank. India has pursued a market-based model of development for the past 25 years, the model that the EBRD champions, and has also very much pursued democratic values. Having India on board is a symbol of what the bank believes in... and it will also help us to do more business with Indian companies, and to get them to invest in our areas of operation. 


Q: The EBRD keeps delivering solid performances despite challenges in a number of its countries of operation. What does this tell us? 

A: This shows that our private sector-focused model works very well. It also shows our great combination of sector depth knowledge and the knowledge of the countries in which we are operating, provided by the offices in all our areas of operation. That matrix delivers these results, and that’s why we do far better than many market players in these regions.

We hit a record number of projects in 2017 – 412 – and invested €9.8bn. On top of that, the fact that we [carried out] a very healthy profit in a region where others have struggled shows that this matrix model works very well. We have also become leaders in a number of areas. One such area is local currency financing. Most people talk about it; we do it. Some 30% of our debt finance operations last year were in local currencies, when the next highest for any other multilateral was less than 10%. This is something we really believe in – to get local currencies and local capital markets going too. We don’t want SMEs to take on foreign exchange risks.

Q: The development of market economies seems to have decoupled from the development of liberal institutions in central Europe and Turkey in recent years. As a major investor in these countries, are you concerned at all?

A: We very much focus on our transition mandate. We are trying to get these countries to move further down the curve towards more effective and sustainable market economies. Therefore, it’s particularly important to focus on the private economy.

In Turkey, 97% of our lending is in the private sector. We do very little with the state, and where we do interact with the state on policy reforms, we are making progress.

In the case of Hungary, there is much less business going on, largely because of very high liquidity in the banking system there; it is difficult to show what we can add to that. Poland, however, remains a very large recipient, and we are focusing more and more on the remaining transition gaps in the country, one of which would be the deepening of its capital markets.

Q: The bank put together a $900m package to help Turkey and Jordan cope with the Syrian refugee crisis. What is your approach there?

A: We do have a role to play there. In the case of Turkey, we worked with the municipality of Gaziantep... on a bus transport project and with local SMEs to try to absorb pressure on the labour market. In the greater Amman municipality, again we worked on public services that are under severe pressure. One in five people in Jordan today is a Syrian refugee. I suspect in Lebanon, when we start operating there, some of our projects will be similar.

Q: What is the footprint for the bank’s operations in Lebanon, which became a new member in 2017?

A: We will focus initially on throwing credit lines to the local banking sector. As we develop, we will have to look at municipalities and public services. Also, we know that in Lebanon there is great pressure from the refugee population, and that is an area we will have to focus on.