Markets Wired

On behalf of the United States, I would like to thank the Management and Staff of the European Bank for Reconstruction and Development for making it possible for the Board of Governors to meet virtually. 

We meet at a time of continued challenges.  Although global economic prospects have improved, developing countries still face limited access to vaccines and limited fiscal and monetary policy space to respond to the economic crisis.  This has led to the pandemic having a disproportionate impact on the poor and vulnerable as well as marginalized groups.  Last month, we joined other G7 countries and announced our intent to build back better for the world—green, inclusive, and just.  The EBRD is well placed to help deliver on that ambition.  As the world recovers from this pandemic over the medium term, the EBRD’s specialized knowledge of private sector development in its countries of operations will be crucial to ensure rapid restoration of economic growth and job creation, particularly in its less advanced transition economies. 

We commend the Bank for answering the call to align its operations with the Paris Agreement according to an ambitious timetable.  We look forward to seeing the Bank’s plans to contribute to our shared goal of mobilizing $100 billion per year to support developing countries in their transition to net zero emissions in the context of meaningful and transparent decarbonization efforts.  As the U.S. Administration’s climate finance plan makes clear, the EBRD and other multilateral development banks are going to be critical partners for delivering on this goal.

At the same time, the United States remains deeply concerned by the use of all forms of forced labor in global supply chains, including state-sponsored forced labor of vulnerable groups and minorities in supply chains for the agricultural and solar sectors.

To enable EBRD engagement and mobilize additional resources, countries must pursue the principles that are at the core of the EBRD’s mission—commitment to open markets, entrepreneurship, and multiparty democracy and pluralism.  All EBRD shareholders should share the goal of fostering vibrant democracies with fully functioning market economies, including in Belarus, where well-targeted, private sector-focused EBRD activities could help promote economic growth and reform, and support the rights of the Belarussian people to a legitimate democratic process.  The EBRD is providing important advisory support to Ukraine to maintain progress on outstanding economic and governance reforms to make its economy competitive and resilient. 

We look forward to the Bank following through on its commitment to increase the proportion of its investment directed at less advanced transition countries, where its work can have greatest impact.  We encourage the Bank take further concrete steps to help countries more advanced in their transition progress closer to graduation, to enable resources to be used where gaps remain wider.  We continue to believe that graduation from EBRD investment is the ultimate indicator of the Bank’s success in achieving its transition mission.

We recognize that progress is not always linear.  Durable graduation may depend on allowing recently graduated countries experiencing a crisis to return to EBRD financing on a short, timebound basis under certain established criteria.  Along these lines, we recently supported the Czech Republic’s re-engagement request and welcome development of a Post-Graduation Operational Approach. 

That Approach is just one piece of a broader discussion on graduation that Governors will have at the Strategic and Capital Framework midterm review.  We look forward to a comprehensive update on graduation at the midterm review, as agreed last year.  We will be closely analysing the capital capacity assessment that Management will provide this fall to aid in any strategic decisions.  The EBRD must be able to sustain its operations on organic capital growth alone and must recognize that any expansion may be capital and resource intensive.  In contemplating any expansion, shareholders must assess that the EBRD provides added value and complements, but does not compete with, other Development Finance Institutions.  Therefore, to avoid overstretching the Bank’s capital and budget, any expansion to sub-Saharan Africa must be accompanied by concrete progress on narrowing and reducing investment, and ultimately graduating, advanced transition economies.  We will need to see options on offsetting measures to evaluate any potential expansion properly. 

Lastly, let me highlight an important point.  The international character of the EBRD and its diverse shareholder base remain foundational strengths, and other efforts to coordinate international development assistance should not undermine those strengths.  The United States remains committed as a strong partner with the EBRD as it extends private sector-led economic opportunities and democratic values across the region.