Statement by the Secretary of State for Treasaury and Finance to the European Bank for Reconstruction and Development Annual Meeting, in Kiev, Ukraine
We are grateful to the Ukrainian Government and the Kiev Authorities for hosting again the EBRD Annual Meeting.
Coming back to Kiev, we gladly confirm the impressive progress this country achieved in the last decade. Ukraine’s encouraging transition path offers proof of the adequacy and relevance of the core goals which proved rationale for the Bank’s inception in the early 90’s, under a mandate that continues to deserve our full support.
2007 was a very fruitful year for EBRD. We congratulate the President, the Board, the Management and the staff for the good performance that was achieved even in face of more difficult operational conditions.
The approval of the Report of the Board of Directors on the 2007 Net Income Allocation will assert the shareholders strong commitment to an efficient fulfilment and improvement of the Bank’s mandate in the years ahead. The different aspects addressed in the Report underlie the need to reinforce sustainability of action as a mean to maximise the impact on transition, permanently in respect of additionality, sound banking and prudent management of its limited resource base.
The Bank has to be mission driven, not volume targeted. Quality and selectivity must remain at the centre of what we endeavour. This said, we must also keep in mind that there is no reason to constrain volume per se significantly below desirable sustainability parameters. The consequent under-utilisation of resources would be in opposition to our aim, that is, the maximisation of transition impact as vigorously as possible.
We also want to express the importance we attach to the establishment of the EBRD Shareholders Special Fund out of the 2007 net income results. This is a most welcomed contribution to a more effective and focussed EBRD activity in the most difficult areas of the Region, the Early Transition Countries and other ODA countries. We are particularly happy with the finely tuned balance reached on the basis of the proposed targets and governance norms.
My country gives great consideration to the proposal for partly allocating the Bank’s 2007 net income to sustainable energy projects, with great focus on energy efficiency and renewable energy projects. Transition deeply lies nowadays on granting energy security and environmentally sustainable growth,
Regarding the distribution of dividends out of 2007 results, we believe that it would be unwise to do it as it creates political problems we cannot ignore, especially as far as views prevailing in most Countries of Operations are concerned. In general terms, we agree with experts’ opinions received by the Bank, considering this type of outflows, though admitted in the Agreement, as a return of capital, rather than a return on capital, given the mission and foundations of the Bank. We are in favour of leaving the discussion of the subject to the preparation of the Fourth Capital Resources Review, along with a broader range of long-term perspectives and the future commitments to the Region. Strong uncertainties on financial markets reinforce the reasons behind this suggestion.
We welcome the Turkish Government’s request to become a Country of Operation and took note with satisfaction of the corresponding preparatory process launched by the Board of Directors. We expect a positive decision from Governors in time to include its application in the 2009 Business Plan and Budget.
It would be helpful at this stage to intensify the Bank’s cooperation with other International Financial Institutions. We specially urge advancing cooperation with the European Investment Bank in Russia, long overdue, Western Balkans and, as to be expected, in Turkey.
My final note is addressed to the change in Bank’s Presidency.
President Lemierre has been a very successful Head of EBRD for eight years. His wisdom and dedicated efforts in steering the Bank as a unique, prestigious and effective multilateral institution deserve unreserved tribute.
We welcome the election of Mr. Thomas Mirow in complete confidence of his leadership qualities and competence. We wish him every success.