2 - 8 May, 2001

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The price of progress

Finance Minister John Dalli recently attended the Annual Meeting of the European Bank for Reconstruction and Development held in London. Mr Dalli is also one of the Bank’s Governors. During the meeting, which welcomed Yugoslavia as a member of the Bank, Mr Dalli spoke on how the pursuit of progress has adversely affected the Maltese environment and how the government is now focussing on embellishment.

Finance Minister John Dalli at the London meeting

Following the success which was registered in 1999 we note with satisfaction that, in 2000, the Bank had another excellent year in terms of operational and financial results.

An increase in business volume of 24 per cent and a more than threefold rise in profits is truly a feat which the EBRD should be proud of. It is encouraging to note that the Bank has achieved a return to positive reserves and ended the year with a strongly-enhanced risk-taking capacity. The Bank has also responded effectively to developments in southeast Europe while, in Russia, annual commitments more than doubled - in line with the more positive economic outlook.

We also note with pleasure the significant increase in activity in the Bank’s micro lending programmes and Regional Venture Funds. On our part we would like to congratulate management for the success achieved, especially in its review of the Bank’s provisioning policy. The Bank also seems to be succeeding in identifying projects which can provide the necessary cash flow to cover debt servicing and repayment.

Now that the right balance has been achieved efforts should be made to raise the level of net disbursements from last year’s level. The Bank should take care not to abdicate from its commitment to the process of transition. We should not forget that, during the past 10 years, the Bank’s impact on the transition process has been quite high.

This is not surprising as the Bank has become the largest single investor in the region. However, the EBRD has not only provided funding but has also introduced new concepts in the areas of policy dialogue and corporate governance. The transition impact of the EBRD is expected to be even higher as the transition economies effect stronger reforms, implement structural changes and become more market-oriented.

The Bank’s mandate, therefore, is still relevant. There are still various issues to tackle and address. In this regard the Bank should ensure that it uses its resources and capabilities to the full in order to accelerate its portfolio growth and achieve higher transition impact as outlined in the recent Capital Resources Review.

Attention also needs to be given to the accession process of the transition countries into the European Union as it poses new challenges for the Bank. The process of accession to the EU has brought with it new opportunities but also more responsibilities. The Bank should, therefore, seek to be innovative and flexible in the range of products it offers and in the extent of its involvement. As more restructuring takes place in the countries of central and eastern Europe the Bank must be ready to re-adjust itself to be able to involve itself in more difficult and, probably, riskier projects.

Most important of all, the Bank must be accessible to its current and prospective clients and sensitive to their needs, whether they are in the process of accession or not. We were pleased to note that the EBRD launched its action plan for Yugoslavia, opened a resident office in Belgrade and proceeded with its first financing operation within a very short span of time of the country becoming a member.

We also support the President’s proposal to use Co-Operation Funds for EBRD activities in Mongolia. Such activities would, without doubt, be beneficial both to Mongolia and to the surrounding region.

Although we believe that the Bank should seek to be more proactive it must not be over-ambitious. The focus should always remain on quality rather than quantity. In particular the Bank must still promote sound banking practices and good governance and should take care not to depart from the principles of financial viability when assessing projects.

The Bank should also keep in mind other dimensions, such as the macroeconomic and social aspects of the countries of operation. In this regard it should seek to enhance its relations with other international financial institutions and co-operate with them for mutual benefit and for the benefit of the economies in transition.

We are pleased to note that the Bank has also continued to give specific attention to environmental issues. The agreement with the Global Environmental Facility, the initiative for a Northern Dimension Environmental Partnership and the EBRD’s readiness to administer the International Decommissioning Support Funds highlight the Bank’s commitment to its environmental mandate.

However, given the extent of environmental depravation in many of the countries of operation, it is evident that much more needs to be done. In particular the EBRD should endeavour to encourage projects which lead to the more efficient use of energy resources as well as those relating to the development of renewable sources of energy.

The environmental dimension is also being more actively considered in our country. Progress in Malta has over the years taken its toll on the country’s environment and on its natural resources. Following the Maltese Government’s success in reining in its fiscal deficit it can now focus on issues which sadly have been overlooked over the past years.

My Government is therefore turning its attention to environmental problems, embellishment programmes and the preservation of our natural and historical heritage. Where feasible the Government always seeks to act in collaboration and in partnership with the private and non-governmental sectors. We feel that this is the most appropriate way to achieve sustained progress.

I end by re-affirming our total support for the Bank in its mission to achieve a smooth transition in the countries of operation. We would like to thank the President and the other members of the Board, particularly our Director, Heiner Luschin, as well as all the staff of the Bank. Finally, my thanks must also go to the UK authorities for hosting this meeting and for their hospitality.


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