EBRD returns to the limelight
Never in the European Bank for Reconstruction and Development’s history has central and eastern Europe needed its support so much. President Thomas Mirow explains its plans to head off the threat of depression to Sudip Roy.
"The EBRD is equipped, willing and ready to stand by eastern Europe during this crisis and well into the future"
Thomas Mirow, EBRD
A LIQUIDITY CRISIS. Macroeconomic instability. Banks in need of capital injections. Political strife. If any region in the developing world has felt the full force of the international financial crisis it is central and eastern Europe. These countries are facing their biggest shock since the fall of the Berlin Wall in 1989. Many are in genuine distress. The economic forecasts make for grim reading. A recent report by the IMF reckons growth in the region, including Turkey, will shrink by 2.5% this year – a stark contrast to the 4.25% growth forecast it made last autumn. The Institute of International Finance predicts that net private capital flows to emerging Europe will fall to $30 billion this year from $254 billion in 2008.
Even those nations that have been seen as rocks of stability, such as the Czech Republic, are becoming swept up in the economic crisis. Although the Czech Republic is forecast to record 5% growth this year and kept a tight rein on the foreign-currency lending that has wrecked other parts of the region, its government collapsed in late March after losing a vote of no confidence.