IFC - WESTERN BALKANS A PARTNER TO THE WBIF December 2014
IFC: A MEMBER OF THE WORLD BANK GROUP IFC IBRD MIGA ICSID IDA International International Multilateral International International Finance Investment Centre for Bank for Development Corporation Reconstructio and Settlement of Association n and Guarantee Investment Development Agency Disputes Loans to Interest-free Guarantees Solutions Conciliation middle- loans and of foreign in and income and grants to direct private arbitration of credit-worthy governments investment’s sector investment development low-income of poorest non- disputes country countries commercial governments risks 1
WHAT WE DO Integrated Solutions, Increased Impact IFC ASSET INVESTMENT ADVICE MANAGEMENT COMPANY Firm-level advice Loans Wholly owned subsidiary of IFC PPP transaction Equity advice Private equity fund Trade finance In partnership w/World manager Syndications Bank, advice on Invests third-party Securitized finance broader market capital alongside IFC development and Risk management enabling environment Blended finance for private sector $6.4 bn under mgmt 720 projects valued at $51.7 bn portfolio $1.1 bn (FY14) (FY14) (FY14) 2
IFC in the Western Balkans 3
IFC Western Balkans in FY14 • IFC has been active in most of the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia) since the early 1990s . • Last fiscal year (FY14), IFC invested $139.5 million in the Western Balkans and mobilized the additional $458.3 million from our partners , supporting projects in the financial sector, infrastructure, agribusiness, and manufacturing. • In the Western Balkans, IFC works with private sector clients, governments, and civil society to bring the benefit of global expertise to the region through its advisory services and investment projects . • Our priorities in the Western Balkans include: agribusiness, infrastructure development with a focus on climate change and improvements in investment climate. 4
IFC and PPPs 5
Macroeconomic Fundamentals and Investment Climate GDP growth: mixed performance in 2014, Government debt as % of GDP Budget deficit as % of GDP expected improvement in 2015 80 -10.0 4.0 60 -8.0 3.0 -6.0 40 2.0 -4.0 1.0 20 -2.0 0.0 0.0 0 ALB BIH HRV EU KSV MKD MNE SRB ALB BIH HRV KSV MKD MNE SRB -1.0 ALB BIH HRV KSV MKD MNE SRB 2013 2014e 2015p 2013 2014e 2015f 2013 2014e 2015f Road network density Doing Business Rankings Logistics Performance Index (LPI) (km of road per 100 sq. km of land area) (1=highest, 178=lowest) (5=best, 1=worst) 139 4.0 3.6 140 3.5 150 3.2 3.1 3.0 120 3.0 2.9 108 107 2.8 2.8 2.7 104 3.0 2.6 2.5 91 2.5 100 100 81 Best 77 75 68 67 65 performers 2.0 80 64 42 57 54 36 50 52 31 30 50 60 45 1.0 40 0 0.0 20 ALB BIH HRV KSV MKD MNE SRB ALB BIH HRV EU MKD MNE SRB 0 2014 2015 2012 2014 BIH HRV EU KSV MKD MNE SRB Infrastructure investment needs for Western Balkans are estimated to be approximately Euro 110 bn. For transport sector - Euro 4 bn per year, Energy sector - Euro 4.5 bn per year, Environment sector Euro 2.4 bn per year. (Source: “Priority Investments in the Western Balkans and Croatia: Analysis of medium-term needs, possible impacts and criteria for ranking in terms of efficiency and development potential, STAREBEI Research Program, 2014. University of Nice with EIB grant financing)
W BG SUPPORT FOR PPPS
IFC PPP ADVISORY IN WESTERN BALKANS • IFC provides advice on designing and implementing public-private partnership (PPP) transactions to national and municipal governments to improve infrastructure and access to basic services such as water, power, health and education. The program is supported by our donor partners: Austria, Norway and S witzerland. Recent mandates: • As part of a broader energy sector reform effort, IFC advised the Albanian Ministry of Economy, Trade and Energy to privatize four hydropower plants (HPP) with a combined capacity of 76.7 MW — HPP Ulëz, HPP S hkopet, HPP Bistrica I, and HPP Bistrica II. The Turkish company, Kürüm International, was awarded the two tenders for the four plants. Kürüm is planning to 2.2 billion rehabilitate HPP Ulëz to improve the reliability of power supply. All four HPPs will be operated in compliance with strict environmental conditions. • IFC played a key role in helping structure and implement the Astha hydropower plant proj ect, Albania’s first maj or hydropower plant construction in 30 years and the government’s first large PPP in the energy sector. Verbund, Austria’s largest electricity company, was the winning bidder of a concession to build and operate a new 53 megawatt hydropower plant expected to improve services for 170,000 people. 8
IFC PPP ACTIVE MANDATES • IFC provides transaction advisory support to the Government of the Federation of Bosnia and Herzegovina to assist with the implementation of a road proj ect under a PPP scheme. IFC is also advising on the Milot - Morine highway proj ect in Albania. • IFC is advising the City of Belgrade in struct uring and tendering a public- private partnerships (PPP) contract for development of waste treatment and waste disposal facility at Vinca t o improve the overall waste management in the capital of S erbia. 2.2 billion 9
Advantages of Working with IFC/Possible Areas for Cooperation • IFC PPP advisory mandate requires the winner bidder to implement the project using IFC/WBG Performance Standards for E&S Risk Management. • Key outcome is that projects are “bankable” from the financial viewpoint as well, creating private sector investment pipeline for IFI and commercial lenders. • Capacity within Governments to understand and implement PPP transactions is generally weak. Specific transactions could benefit from PIUs with knowledge transfer to benefit future projects. • Fine tuning of the upstream laws and regulations for PPPs, using the practical experience of implementing specific transactions, sometimes requires consultants/legal work. 10
THANK YOU! Thomas E. Lubeck Regional Manager, Western Balkans Bulevar Kralja Aleksandra 86 11000 Belgrade Tel: +381 11 3023 750 Email: Tlubeck@ifc.org 11
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