EnglishThe European Bank for Reconstruction and Development (EBRD) has asked member states to authorize a 50 per cent capital increase to enable the bank to mitigate the impact of the ongoing global economic crisis on Central and Eastern European Countries, the Financial Times reported.
According to the Financial Times, the EBRD, which is controlled by 61 countries, including European Union members, the U.S. and Japan, has asked for an additional injection of 10 billion EUR to expand lending operations and compensate for a dire decline in private capital flows into the former communist countries.
In a letter sent to the shareholders last week, EBRD President Thomas Mirow warned that, although the economies in the bank"s scope had started to stabilize, stabilization was not uniform "and it would be premature to say that a general turnaround has begun. The crisis will have lasting repercussions".
Thomas Mirow pointed out in his letter that, working with the current capital of 20 billion EUR, the EBRD would have to reduce annual lending to some 8 billion EUR in 2009-2010 and then further reduce it 6 billion EUR. Mirow therefore recommended shareholders to increase the bank"s capital by 10 billion EUR to allow the bank to commit 9-10 billion EUR per year or 20 billion EUR between 2010-2015.
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