Washington D.C., June 1, 2001
─The Federal Republic of Yugoslavia (FRY) has become the newest member of the International Finance Corporation, paving the way for IFC to mobilize private sector investment and advisory work at a critical moment in the country’s economic reconstruction.
In a letter from IFC Executive Vice-President Peter Woicke to the FRY Deputy Prime Minister, Miroljub Labus, Mr. Woicke warmly welcomed FRY as a member and said that IFC looks forward to supporting FRY in its development and transformation efforts. He added that IFC intends to provide vigorous support to investment creation and private sector development, which needs to be the driving force in the country’s economic recovery.
Woicke stressed the importance of rebuilding FRY’s financial sector. He said IFC expects to assist the government in its efforts to restructure the large banks as well as working on new investments with both local and foreign banks. IFC will also help to develop micro-finance, leasing and other instruments to broaden the range of financial services available to businesses and the public.
Over the past few months, IFC has been actively engaged in project assessment, identifying viable private sector companies that could benefit from loans, investment, or technical assistance. Private sector firms in Yugoslavia faced a very difficult business environment in recent years, but many appear to have considerable potential, according to preliminary IFC findings. IFC will also seek foreign investors both to partner local companies and to undertake new investment.
The Swedish Government, through the Swedish International Development Cooperation Agency, has set up with IFC a special trust fund facility of SKr 16 million (approximately $1.5 million equivalent) for FRY, which has been an invaluable resource in this assessment and re-engagement work.
IFC expects to provide advisory support in privatization and institution-building, as well as technical assistance to small businesses through its international donor-supported facility, South East Europe Enterprise Development (SEED).
FRY was accepted as a member of the World Bank on May 8, 2001, which was a necessary prerequisite for IFC membership. Currently, the World Bank gives policy advice and support for the re-launch of government privatization plans. IFC expects to provide finance for key enterprises in conjunction with this privatization.
Before membership was finalized, IFC and FRY held discussions on the issue of past arrears. Several IFC loans for which banks in FRY were the borrowers or guarantors are in arrears and the plan is to resolve these arrears through loan restructuring within 12 months.
IFC expects to establish an office in Belgrade in the near future and its operations will be supported by its regional hub in Istanbul.
The mission of IFC (
www.ifc.org
), part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people's lives. IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
