BSTDB to tar­get multi-coun­try projects, greater pub­lic sec­tor en­gage­ment

Top 100 See - - Top 100 Companies - By Nevena Krasteva

What ma­jor chal­lenges do you see fac­ing the economies in South­east Europe (SEE) and the pri­vate sec­tor in par­tic­u­lar? What steps can gov­ern­ments they take to im­prove the over­all busi­ness cli­mate and un­lock the re­gion's growth po­ten­tial?

The Black Sea re­gion is very di­verse. The coun­tries have dif­fer­ent lev­els of eco­nomic de­vel­op­ment, they are of­ten at dif­fer­ent stages of the busi­ness cy­cle, have dif­fer­ent de­grees of open­ness to in­ter­na­tional ex­changes, and have dif­fer­ent eco­nomic struc­tures. Vary­ing lev­els of in­te­gra­tion in the world econ­omy, in­ter­nal and ex­ter­nal pol­icy chal­lenges of­ten re­sult in in­creased vul­ner­a­bil­ity to ex­ter­nal shocks.

On the pos­i­tive side, coun­tries in the re­gion, with few ex­cep­tions, have con­sol­i­dated eco­nomic per­for­mance through pru­dent fis­cal man­age­ment, macroe­co­nomic and struc­tural re­forms. To some ex­tent the coun­tries' dif­fer­ences present cross-coun­try com­ple­men­tar­i­ties with sig­nif­i­cant ben­e­fits from in­creased re­gional eco­nomic co­op­er­a­tion.

What is BSTDB's re­sponse to these chal­lenges?

BSTDB is ready to sup­port the economies of its eleven member coun­tries through fo­cused pro­vi­sion of fi­nan­cial as­sis­tance to ex­port-ori­ented cor­po­rate clients, small and medium en­ter­prises, trade fi­nance, and in­vest­ment in the pub­lic sec­tor.

What are the high­lights of BSTDB's next four-year strat­egy? What main goals does it set? Does it en­vis­age any ma­jor shift in fo­cus?

The bank's strat­egy aims at achiev­ing higher de­vel­op­ment im­pact and in­creased re­gional co­op­er­a­tion through the bank's oper­a­tions and in­vest­ment across the Black Sea re­gion. The four-year strat­egy en­vis­ages in­creased

sec­toral di­ver­si­fi­ca­tion and in­tro­duc­tion of in­no­va­tive and more flex­i­ble fi­nan­cial prod­ucts with in­creased fo­cus on projects in­volv­ing two or more coun­tries. In the pe­riod ahead, the bank will make an ef­fort to achieve an an­nual port­fo­lio growth with an em­pha­sis on qual­ity.

The bank's other strate­gic ob­jec­tives in­clude fur­ther strength­en­ing of the credit rat­ing of the in­sti­tu­tion. Over the pe­riod 2010-2014, BSTDB was up­graded twice by Moody's, to A2 long-term. The bank will try to achieve a fur­ther im­prove­ment in the risk rat­ing over the next four-year pe­riod.

Oper­a­tionally, BSTDB will tar­get an in­creased share of pub­lic and quasi-pub­lic sec­tor oper­a­tions, in­clud­ing mu­nic­i­pal fi­nanc­ing and PPP projects.

Im­por­tantly, BSTDB will con­tinue em­pha­siz­ing sup­port for small share­hold­ing coun­tries – Al­ba­nia, Ar­me­nia, Azer­bai­jan, Ge­or­gia, and Moldova. This dy­namic group of coun­tries has a com­bined share of 9.0% in the bank's cap­i­tal, and a port­fo­lio share at about 20%. In par­al­lel, the bank will ex­pand the use of tech­ni­cal as­sis­tance for project prepa­ra­tion in member coun­tries through the es­tab­lished spe­cial funds and con­tinue pro­vid­ing ad­vi­sory sup­port to part­ner in­sti­tu­tions in member coun­tries. Ear­lier this year, BSTDB pro­vided ad­vi­sory sup­port to the Bul­gar­ian De­vel­op­ment Bank in launch­ing trade fi­nance oper­a­tions.

What is the to­tal vol­ume of BSTDB's planned fund­ing com­mit­ments in SEE for the next four-year pe­riod?

With the sup­port of di­rec­tors and guid­ance from the board of gov­er­nors, the man­age­ment of the bank is now en­gaged in a strate­gic plan­ning ef­fort to be fol­lowed by vis­its to member states for iden­ti­fi­ca­tion of gov­ern­ment pri­or­i­ties and busi­ness op­por­tu­ni­ties. The bank's man­age­ment will pro­vide the gov­er­nors with pro­pos­als for fu­ture oper­a­tions, in­clud­ing am­bi­tious lend­ing vol­ume tar­gets.

Which are the key ar­eas of BSTDB's oper­a­tions? Do you plan to step up sup­port for cer­tain in­dus­tries? In what sec­tors do you ex­pect to see a pick-up of over­all in­vest­ment ac­tiv­ity?

The bank fo­cuses on pro­vid­ing fi­nanc­ing in ac­tiv­i­ties with high de­vel­op­ment im­pact, gen­er­at­ing growth and em­ploy­ment across member coun­tries. The BSTDB strat­egy puts an em­pha­sis on oper­a­tions pro­mot­ing phys­i­cal and so­cial in­fra­struc­ture, trade fa­cil­i­ta­tion, mu­nic­i­pal ser­vices and pub­lic util­i­ties, en­vi­ron­men­tal pro­tec­tion, power gen­er­a­tion, and trans­port. Fi­nan­cial in­ter­me­di­a­tion through the bank­ing sec­tor in the re­gion will con­tinue to be a sig­nif­i­cant BSTDB op­er­a­tional ac­tiv­ity in the years to come.

BSTDB will tar­get an in­creased share of pub­lic and quasi-pub­lic sec­tor oper­a­tions.

Would BSTDB con­sider join­ing any of the big cross-border en­ergy projects in the re­gion?

Ab­so­lutely! BSTDB is keen to con­trib­ute to en­ergy se­cu­rity in our member states and gives pri­or­ity to re­gional and cross-coun­try de­vel­op­ment projects. Al­ready, the bank is ac­tive in the en­ergy sec­tor through pro­vi­sion of fi­nanc­ing for re­new­able en­ergy and en­ergy ef­fi­ciency projects. Op­por­tu­ni­ties that may arise in the en­ergy sec­tor will be care­fully as­sessed, and to the ex­tent that they are in line with the bank's man­date, fi­nan­cial and en­vi­ron­men­tal stan­dards, will def­i­nitely be sup­ported by BSTDB.

What are BSTDB's plans re­gard­ing co­op­er­a­tion with in­ter­na­tional fi­nan­cial in­sti­tu­tions (IFIs), donors, and other ex­ter­nal ac­tors?

Co­op­er­a­tion and part­ner­ship with IFIs and bi­lat­eral de­vel­op­ment in­sti­tu­tions ac­tive in the Black Sea re­gion is a BSTDB strate­gic pri­or­ity and an in­te­gral part of the bank's strat­egy for in­creased re­source mo­bil­i­sa­tion for the member coun­tries.

The BSTDB strat­egy fo­cuses on pro­mo­tion of in­fra­struc­ture, trade fa­cil­i­ta­tion, mu­nic­i­pal ser­vices and pub­lic util­i­ties, en­vi­ron­men­tal pro­tec­tion, power gen­er­a­tion, and trans­port.

One of the in­stru­ments that BSTDB is us­ing to help es­tab­lish closer busi­ness ties with mul­ti­lat­eral and bi­lat­eral de­vel­op­ment in­sti­tu­tions is “Ob­server Sta­tus with BSTDB”. Ten mul­ti­lat­eral and na­tional de­vel­op­ment in­sti­tu­tions are BSTDB Ob­servers, in­clud­ing ma­jor IFIs, such as the Euro­pean In­vest­ment Bank, the Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment, and the In­ter­na­tional Fi­nance Cor­po­ra­tion, and lead­ing na­tional de­vel­op­ment as­sis­tance in­sti­tu­tions, such as Ger­many's KfW, the De­vel­op­ment Bank of Aus­tria (OeEB), Proparco of France, and oth­ers. The ob­server mech­a­nism en­vis­ages reg­u­lar con­tacts at the level of se­nior man­age­ment and ex­perts to up­date each other on strate­gic pri­or­i­ties for com­mon coun­tries of oper­a­tions, co-fi­nanc­ing op­por­tu­ni­ties, fund­ing op­tions, tech­ni­cal as­sis­tance and other mat­ters of com­mon in­ter­est. Ob­server in­sti­tu­tions also pro­vide fi­nanc­ing to BSTDB to on-lend to clients in the Black Sea re­gion. Over the past three years, BSTDB has signed long-term loans of over 200 mil­lion euro with KfW, the Nordic In­vest­ment Bank, Proparco, and OeEB. These funds are used for fi­nanc­ing projects in re­new­able en­ergy, mu­nic­i­pal in­fra­struc­ture, small busi­ness de­vel­op­ment across the Black Sea re­gion. Look­ing for­ward, BSTDB will fur­ther ex­pand this co­op­er­a­tion with ex­ist­ing ob­servers and other de­vel­op­ment part­ners for the ben­e­fit of the re­gion.

A strate­gic con­cept is to lever­age the bank's fi­nanc­ing to act as a cat­a­lyst for at­tract­ing com­ple­men­tary sources of fund­ing for our clients, pro­mot­ing the re­gion's in­vest­ment po­ten­tial. From this per­spec­tive, the bank's strat­egy is closely associated with en­hanced part­ner­ships with other IFIs and pub­lic and pri­vate co-fi­nanc­ing part­ners.

Ih­san Ugur De­likanli, BSTDB pres­i­dent

The Black Sea Trade and De­vel­op­ment Bank (BSTDB) is an in­ter­na­tional fi­nan­cial in­sti­tu­tion es­tab­lished by Al­ba­nia, Ar­me­nia, Azer­bai­jan, Bul­garia, Ge­or­gia, Greece, Moldova, Ro­ma­nia, Rus­sia, Turkey, and Ukraine. Its head­quar­ters are in Thes­sa­loniki, in Greece. BSTDB sup­ports eco­nomic de­vel­op­ment and re­gional co­op­er­a­tion by pro­vid­ing loans, credit lines, eq­uity and guar­an­tees for projects and trade fi­nanc­ing in the pub­lic and pri­vate sec­tors in its member coun­tries. The bank’s au­tho­rised cap­i­tal is 3.45 bil­lion euro. BSTDB is rated long-term “A-” by Stan­dard and Poor’s and “A2” by Moody’s.

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