February 6, 2003 EBRD Belgrade

1
FR Yugoslavia Achievements and Challenges

• February 6, 2003
  EBRD Belgrade

2
Progress in transition and economic performance

• Laggards in transition continue to catch up with
  transition front-runners
• EBRD-World Bank BEEPS shows significant
  improvement in the business environment from 1999
  to 2002
• Reforms contribute to macroeconomic resilience
  and greater access to foreign capital

3
Greatest reform steps mostly taken by less
advanced countries
4
Transition scores for Yugoslavia Progress on
many fronts in 2002

• Small-scale privatisation
• Price liberalisation
• Trade and foreign exchange
• Large-scale privatisation
• Governance and restructuring
• Competition policy
• Infrastructure
• Banking reform
• Non-bank financial institutions

2001 2002
3 3 3.33 2 2 1 2.132 2.33 1.67
3 3 3 1 1 1 2 1 1
5
Progress in institutional reform is particularly
impressive
6
Local firms see improvement in the business
environment

• Summary of 1999 and 2002 BEEPS, perceptions
  adjusted for growth

CEB 1 no obstacle 4 major obstacle
7
Local firms see improvement in the business
environment

• SEE and CIS show greater gains than CEB - sign of
  catching up

SEE 1 no obstacle 4 major obstacle
8
FRY Access to finance, taxes and judiciary are
main problems
9
Even corruption comes down
Proportion of firms that pay bribes frequently
Bribe tax as percentage of total sales
10
Growth slows but shows resilience
11
as FDI reaches record levels
12
The outlook for the region

• Growth set to rise in 2003 in CEB / SEE but to
  slow further in CIS

13
Key medium term challenges

• Accession countries
• boost competitiveness through deeper
  institutional reforms and greater FDI
• manage fiscal / monetary challenges of accession
• SEE
• enhance regional co-operation and reduce reliance
  on private and official transfers
• CIS
• diversify sources of growth away from energy /
  natural resources
• build state capacity, particularly in poor,
  indebted countries

14
Key medium term challenges for FRY

• Attract local and foreign investment through
  privatisation and restructuring
• Rehabilitate infrastructure through investment
  and carefully managed tariff increases
• Strengthen confidence and encourage financial
  deepening in the financial sector

15
Operational priorities in Yugoslavia

• Shift to private sector (privatisation, FDI,
  restructuring, local blue chips )
• Demonstrate ways of restructuring large
  enterprises
• Banking sector and SME support
• Continued infrastructure investment (together
  with other IFIs co-financing)
• Promote a sound investment climate, good
  corporate governance and stronger institutions

16
Signed projects in Yugoslavia

• 1. Private Corporate
• Hemofarm corporate loan ( 18M)
• Direct Investment Facility - Progas ( 0.4M)
• Working Capital Facility ( 65M)
• 2. Financial Sector
• Micro Finance Bank ( 8M)
• Eksim Banka equity investment (1.4 M)
• Raiffeisen Subordinated Loan ( 10 M)
• 3. Infrastructure sector
• Emergency power sector reconstruction ( 100M)
• Railway reconstruction programme ( 57M)
• Novi Sad, Nis, Kragujevac Water Supply (16 M)
• Belgrade Municipal Infrastructure ( 60M)
• Road Recovery Project ( 76 M)

17
How to contact us

• Dragica Pilipovic-Chaffey - Directore-mail
  pilipovd_at_ebrd.com
• Ulf Hindstrom - Senior Banker - Public Sector
• e-mail hindstru_at_ebrd.com
• Marek Lorinc - Principal Banker - Private
  Sectore-mail lorincm_at_ebrd.com
• Danica Kilibarda - Associate Bankere-mail
  kilibard_at_ebrd.com
• Evgeny Angelov - Associate Banker
• e-mail angelove_at_ebrd.com
• Valeriu Razlog - Associate Banker
• e-mail razlogv_at_ebrd.com
• Miljan Zdrale - Analyst
• e-mail zdralem_at_beg.ebrd.com

EBRD Belgrade Office Unit B22, Genex Business
Center, 6 Vladimira Popovica St 11070 Belgrade
tel [phone] fax [phone]