1 Effective Support for Enlargement Accelerating public investments Western Balkans Investment Framework Brussels, 19 October 2009 Alessandro Carano, EIB Richard Jones, EBRD

2 Presentation EIB activity EU Western Balkans Investment Framework Background and Purpose EBRD Western Balkans Fund Key elements Status

3 EIB activity in Western Balkans Support to EU Pre-Accession process and EU policies. External mandate lending up to EUR 8,700m for W/Balkans and Turkey, with EC guarantee. Pre-Accession Facility of EUR 5,500m for at EIB own risk, for candidate countries. Technical Assistance with own resources (EUR 1m+10m). Response to the crisis. Sectors: infrastructure, SMEs & private sector, health&education.

EIB activity in Western Balkans In candidates countries, Croatia and FYROM, priority is given to pre- accession support and the compliance with the acquis communautaire. In potential candidates countries, in the late 1990s and early 2000s focus was on urgent restoration and repair of damaged infrastructure. Thereafter, EIB loans were earmarked for modernisation and upgrade of infrastructure facilities with a view to (i) raising the quality standards of national systems, and (ii) fostering integration of the Balkans countries into a wider European market and preparing their eventual integration into the EU. Over the last three years, EIB has diversified into new sectors, such as health and education, in addition to further development of environmental projects. EIB has also increased its support to small/medium sized investments from SMEs and local authorities through lines of credit with banks and leasing companies.

EIB activity in Western Balkans –

6 Western Balkans Investment Framework background Building on existing EU instruments, EU ECOFIN Council of May 2008 set out to improve effectiveness of assistance in the Western Balkans. Called on EC, EIB, EBRD, CEB to establish by 2010 a comprehensive Western Balkans Investment Framework to enhance harmonisation and co-operation in investments for socio- economic development in the region. Underlined need to streamline existing facilities in the context of the Investment Framework, starting with priority infrastructure projects. A Steering Group has been created including EC, EIB, EBRD, CEB and Member States actively involved in the region.

7 Western Balkans Investment Framework purpose Investment needs are high across the region and financing for priority projects to be scaled up, pooled and accelerated WBIF pools loans and grants, offering clients an integrated financing package Compounding the Beneficiaries planning, priorities and coordination of donor funds to support real priorities with: ECs policy and cooperation expertise in the accession process Partner IFIs technical competence and financial means

8 Western Balkans Investment Framework purpose Prioritization aligned with national plans and national IPA grants Grant: Technical assistance and grant co-financing from the EC, IFI resources, Member States and potentially other donors. TC is vital for project preparation and implementation; leverage of donor funds can be very high. Grant co-financing is also needed e.g. to overcome debt constraints and financing gap with high social returns. Lending: synergies and catalytic effect between EIB, EBRD, CEB and MS bilateral institutions.

9 EBRD Western Balkans Fund (WBF) – Building on success Established in November 2006 as an ODA-recognized multi-donor fund at EBRD to provide mainly Technical Assistance to EBRD investment projects 16 donor countries, with contributions so far of Euro 26 million More then 70 TA projects funded, supporting substantial EBRD investments Strong focus on financial institutions, infrastructure including in transport and municipal sectors With WBF support, EBRD is set to invest EUR 900 million over 60 projects in the Western Balkans in 2009

10 Western Balkans Investment Framework – delivering more together Joint Grant Facility and Joint Lending Facility Pooling resources and combining the strengths of the IFIs to accelerate public investments, as mandated by ECOFIN Common project definition and coordinated appraisal Common approach to social and environmental components, parallel tendering Common work to meet conditions for effectiveness and disbursement Single mechanism for blending IFI loans with grants

11 Western Balkans Investment Framework key elements Sectors: transport, energy, environment, social sectors, SMEs, energy efficiency, etc. Countries: all Western Balkans (incl. Croatia) Joint Grant Facility - TA and investment grants 1.EC budget : 32m (TA), 24m (Municipal), other IPA national funds (at least 30m). 2.EIB, EBRD, CEB: 30m ( 10m each). 3.Member States and other donors via the European Western Balkans Joint Fund (jointly managed by EIB-EBRD). Joint Lending Facility EIB and EBRD lending of 1 billion, amount can be increased CEB and possibly other Bilateral institutions

12 Western Balkans Investment Framework status Terms of reference approved Official signature on Dec. 9 th 2009 Infrastructure – examples: Serbia Corridor X Albania Regional Roads BiH Corridor Vc SMEs / Energy Efficiency EC Private sector support facility (IPA crisis response)

13 Western Balkans Investment Framework – Infrastructure Pipeline Identified Transport, Energy and Municipal and Environmental Infrastructure (MEI) Projects for over 6bn, requiring over 3bn in direct IFI financing Over 3bn in Transport, 2.5bn in Energy and 0.7bn in MEI 16 projects in Transport, 9 in Energy, 18 in MEI, good geographical balance. Of the 6bn, over 2bn are for projects qualifying for inclusion in the JGF/JLF These will be co-financed by at least 2 IFIs and could mobilise up to 100m of grant resources for project preparation and implementation but also for grant co-financing Out of this, EIB/EBRD loans for over 1 bn expected to be signed in the region by end-2009.