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Lemierre to lead EBRD gathering

Ukraine’s single largest financial investor, the European Bank for Reconstruction and Development (EBRD), will host its 17th annual Board of Directors meeting and Business Forum in Kyiv on May 18 and 19.

The EBRD was established in 1991, in the wake of the Soviet Union’s collapse, to help countries transition from planned to free market economies and foster the development of democracy in the former Communist states. Since it began operating in Ukraine in 1993, EBRD has invested more than 6 billion euros in 163 projects (see sidebar on page 9).

In a May 13 interview with the Post, EBRD President Jean Lemierre discussed how Ukraine has changed in the decade since the EBRD last held its annual meeting in Kyiv.

Indeed Ukraine has changed, Lemierre said confidently from his office in London.

“It is a totally different country than it was 10 years ago, both politically and economically, and has considerable potential,” he said.

Politically, the country underwent a peaceful revolution, known as the 2004 Orange Revolution, and has established a multi­party representative democracy, he said.

Economically, the long phase of privatization of state­owned property is drawing to a close, and a new phase has begun where private owners are consolidating their business, restructuring them efficiently and becoming more transparent, Lemierre added.

Lemierre, the EBRD’s fourth president and a native of France, is completing his second term and will step down this summer. His successor, Thomas Mirow of Germany, will be formally introduced at this weekend’s meeting and the Board of Governors is expected to approve his appointment.

Three project areas have been critical in assisting Ukraine’s transition, Lemierre said. The establishment of credit lines, in partnership with local banks, has been indispensable to developing small­ and medium­sized enterprises (SME) and Ukrainian entrepreneurship, he said.

The bank’s financing of energy efficient projects has helped Ukrainian businesses remain competitive in world markets, Lemierre added. Infrastructure investments, particularly on the M06 Kyiv­Chop highway, are ensuring Ukraine becomes integrated into the European marketplace, Lemierre said.

While Lemierre is bullish on Ukraine, he acknowledged some of the critical challenges Ukraine’s government faces, specifically implementing the rule of law, and the problem of inflation.

Ukraine’s government has done well in passing and updating legislation, Lemierre said.

“What is key is the implementation of the rule of law, and progress has yet to be achieved, not only in the judiciary but in how the law is administered too,” he said.

In regards to Ukraine’s “quite high inflation,” Lemierre urged political leaders to resist making exporting agricultural goods more difficult by re­instating quotas and raising duties.

Instead, he advised the government to continue reforms in the agricultural sector, especially regarding the land use registry.

This will attract more investment in Ukrainian agriculture, which in turn will remove transportation and storage bottlenecks, and aid in developing the food­processing industry, he said.

In terms of improving Ukraine’s investment environment, Lemierre called for settling the constitutional debate.

“There is a clear understanding by investors of how the country is governed and according to which rules it is managed,” he said.

The Board of Governors will meet in Kyiv’s October Palace to discuss how to distribute the bank’s 2007 profit totaling 1.1 billion euro.

The proposal allocates 80 percent of profit to the bank’s reserves, strengthening the institution and allowing future risk, according to Lemierre.

About 10 percent, or 115 million euro, will be placed in a new shareholders’ fund for technical assistance to the poorest countries receiving EBRD funding.

The remaining 135 million euro will be donated to the Chornobyl Shelter Fund.

The bank’s Business Forum will include three specialized discussions on economics, capital markets and mortgage from a legal prospective; six panel discussions on the latest trends in Ukraine, numerous country­focused presentations on the latest developments, and a “women in business” discussion and awards ceremony.

Numerous receptions are planned, including one hosted by Prime Minister Yulia Tymoshenko at Friendship Arch Park and another hosted by President Viktor Yushchenko at the historic Mystetskiy Arsenal building.

The annual meeting will be officially opened by Viktor Pynzenyk, Ukraine’s Minister of Finance and EBRD governor, and Varel Freeman, EBRD first vice president, at 8:30 a.m. on May 18.

Kyiv Post. Lemierre to lead EBRD gathering