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WASHINGTON, D.C., Nov. 4—The International Finance Corporation (IFC) today announced it will provide a loan of up to DM8.8 million (US$5.2 million equivalent) for Sarajevska Pivara, d.d., the largest brewery in Bosnia and Herzegovina (BiH). The financing will be used to diversify the firm's product range to include soft drinks and introduce new packaging for its products. The project will boost the company's efficiency and competitiveness. It will also create further employment, foreign exchange savings, and improved distribution and supply networks of consumer goods for the BiH population.
Sarajevska Pivara's facilities were severely damaged by mortar shells during the war. Although production never stopped, it was reduced to a small fraction of its former capacity. Despite a limited source of raw materials and impaired access to markets, the firm is now operating at about forty percent of its pre-war capacity and has made significant progress in re-establishing its sales and distribution capabilities. "Almost four years of strife seriously damaged Bosnia and Herzegovina's economy and brought industry to a near standstillsaid Mr. Harold Rosen, Director of IFC's Europe I Department. "The IFC investment in Sarajevska Pivara will provide a critical boost and diversification to the company's production," . It will also provide a much needed success story for private investment in the country and improve investors' perception of the general business environment in Bosnia and Herzegovina."
Sarajevska Pivara was established in Sarajevo as a private entity in 1864. In 1947 the firm was nationalized. In 1990, Sarajevska participated in a national privatization program whereby the State's ownership stake was partially privatized through purchases of shares by management and employees. Sarajevska produces beer, carbonated water, and carbonated soft drinks.
In addition to the IFC financing, Sarajevska Pivara will receive loans of up to DM5 million (US$3 million equivalent) from domestic financing institutions. Preparation of the loan was assisted through a financial audit of the company funded by the Government of Italy under the IFC-Italy Technical Assistance Trust Fund.
In April 1996, Bosnia and Herzegovina formally assumed membership of the World Bank Group. Since then, the Bank Group has taken a leading role in reconstruction of the country and, with the European Union, is coordinating all donor support.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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