EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT ANNUAL MEETING, WARSAW, EBRD President s Press Conference

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1 EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT ANNUAL MEETING, WARSAW, 2014 EBRD President s Press Conference Thursday 15 May 2014

2 THE PRESIDENT: Good afternoon. It is very good to be here with you all. I thought I would make some introductory remarks, and then I will be happy to take questions. The first thing to say is that this has been a very important Annual Meeting, where the EBRD is trying to set the stage for its operations in the coming years. We came to Warsaw for a special reason, as you all know: Poland has been at the heart of the transition process for the last 25 years since the collapse of communist rule in central Europe. Following very productive discussions with our shareholders we have ensured that the EBRD is extremely well positioned to support the economies of the regions where we work so that we are able to prepare the ground for more robust economic growth in future. That is obviously particularly important at the moment given the pressures that are now weighing on this region in the light of the latest geopolitical tensions. Why was this Annual Meeting particularly important? It is because it is not at every Annual Meeting that shareholders agree the Bank's Medium-Term Directions, our medium-term strategy. The last one was in 2009, and so it was clearly very important to do that here. Shareholders overwhelmingly approved the approach that the Bank is taking to deal with the economic problems that are facing the region. Yesterday you heard the forecasts from the Chief Economist, and you heard about the immediate challenges to the transition region from the tensions between Russia and Ukraine. We have wound back our economic forecasts, which is well known to everyone, even though there are now positive signals coming from the eurozone and from the fact that the American monetary policy changes are weighing less heavily on the global economy. We have to deal with the longer-term problems linked to the slow-down in the reform process. These were highlighted very clearly in the 2013 Transition Report: Stuck in Transition? That is a very important backdrop to the discussions here in Warsaw. In my meetings with the EBRD Governors I made proposals, endorsed by the Board of Directors, that will have the EBRD working very hard over the next few years to try and Press Conference

3 reverse this trend. We showed our Governors how we aim to re-energise transition with three headlines. These headlines and the overall directions were endorsed by Governors. First, we said we would build resilience into the transition process by helping to build sound institutions, promoting inclusion and developing more effective economic structures. We aim to do this by complementing our project work with much more intense and systematic dialogue with the authorities and governments to help them implement policies and create a framework that will support reform and transition. There was extremely strong demand from our countries of operations for much work by the EBRD to help them create better investment climates, better governance, and there was wide support for anti-corruption work by the Bank more generally. The message I take from that is that the Bank needs to move very rapidly on this: the need is clearly felt to be urgent in a number of countries, which made statements to that effect. Second, we said that we would place even greater emphasis on promoting economic integration, both globally and regionally. Many of our economies continue to see their way forward as being through integration into the European Union and the global economy. Many of them are also looking to other parts of the world. There was a very interesting panel on Europe and Asia about the integration that is taking place, although we do not talk about it very much. We need to take an interest in that because the EBRD is already in eastern Europe and Central Asia. Third, we said we would build on our expertise in helping to address common global challenges, such as climate change, water scarcity and food security. There was a very big push from a number of shareholders for the EBRD to do more on energy security. These are areas where we already do quite a bit. In regard to energy efficiency and climate change with the private sector the EBRD is seen as the leading multilateral organisation, and we are being urged to do more in that area. We have an ambition to do much more across these subjects. During the Meetings the EBRD s Governors made some very significant and important decisions. They agreed that Cyprus should temporarily become a recipient of EBRD financing and they also admitted Libya as a member of the Bank with a view to it becoming a recipient country in due course. Press Conference

4 I would like to remind you, as has been well reported, that I travelled to Warsaw via Kiev where I stayed for a couple of days, Sunday and Monday. I signed an anti-corruption initiative with the Ukrainian authorities. This is very important because it is part of a renewed drive to provide support for the Ukrainian economy, increasing our investments as part of a coordinated international response. We signed projects in Ukraine in the first four months of this year worth 400 million. I expect us to get to half a billion next month and one billion or more per annum over the next few years; so we should get to a billion by the end of this year. We are well on track to do that. That is a very big scale-up from the last few years. Ukraine used to have about 1 billion a year of EBRD investment back in 2010 and 2011, but that figure has fallen because of the lack of reform since then. As part of this, because Ukraine is now committed to implementing reforms the EBRD is returning to public-sector projects in Ukraine. Once the IMF board approved the IMF standby agreement with Ukraine we were able to release funding for the public-sector roads project, which will be a very important boost to the economy of Ukraine. Very good news has just come through from Kiev that the Rada has just approved the conditions that will make the nuclear safety project that we approved in March last year effective. That is a further 300 million of investment that will go in from us, and there will be a further 300 million from the EIB. The parliament in Kiev is helping us to implement projects very quickly. In fact, Ukraine could very well set an example for our Medium-Term Directions. You probably heard me identify that in my speech as a symbol of where we want to go to. We want to make the Ukrainian economy much more resilient. The anti-corruption initiative is obviously a very good example of the building of institutions, of policy dialogue, and we are working on trying to get Ukraine re-integrated into the European economy. It needs to have an export promotion drive, without a doubt; it needs to set higher quality standards for its products; and of course you cannot address the problems in Ukraine without addressing energy efficiency and energy security. We will do that as well. Press Conference

5 We had a very strong message of support from our shareholders for what we are doing and will be doing in Ukraine. I will stop there and take questions. MR PETER SEMLER (Capitol Intelligence Group): I have also just come back from Kiev and Odessa, and one of the universal complaints of all Ukrainians is the weight and influence the criminal element and oligarchs have in the economy. Everyone would welcome new private-sector players taking over many of these companies and bringing them to best practices. Is this something that the EBRD will be looking at? THE PRESIDENT: There are two parts of our response to that, and both are yes. First, we have to tackle the corruption problem, the graft, by having independence in the whole process through which we tackle it. There is distrust by clean businessmen of state authorities because of what has happened in the past, so they need to go to an independent ombudsman with their complaints first and that independent ombudsman, he or she, needs to be able to assess those complaints and report publicly and transparently on them. There will be an annual review and process and we will see all the results of that independent process. That is on the corruption side. Secondly, I think you are right that in Ukraine there are a lot of companies, particularly state-owned ones, which have not been run well and have had criminal elements involved with them, with links to politics, links to the judiciary and so on and it is an unholy mess. Part of the answer that the government wants to pursue in future is to try to clean up those companies and put many of them up for privatisation. This is an area where EBRD obviously has had lot of experience in other countries and we will play a strong role as part of that process. Potentially in some state-owned entities that are moving towards a commercialised and then to a privatised approach, and also in the banking sector, we would be thinking about whether we might take equity even as part of improving corporate governance and cleaning up. Press Conference

6 MR NEIL BUCKLEY (Financial Times): You said in your speech at the opening session yesterday that tensions in relations between Russia and Ukraine can present the Bank with major challenges. Could you elaborate a bit on what exactly those challenges might be and how you see them? Secondly and related, you did say one of the challenges was the possibility of being unable fully to meet our plans in one region and therefore having to reallocate the Bank s spare capacity elsewhere. Was that an allusion to the possibility of further sanctions against Russia which could complicate the Bank s operations there? THE PRESIDENT: Thank you very much, Neil. I think there are two types of challenges and they are linked. One of them is obviously economic. The economic challenge is that, as these economies slow down obviously Russia but also other economies that have been linked with the Russian economy and I think here not enough focus has been placed on the Central Asian economies which are very dependent on Russia for remittances, for example then the likelihood is that investment from both domestic sources and foreign sources may slow down. There is a big question here as to what extent EBRD can act as a countercyclical force almost that is, if you like, the second challenge and do more to compensate, or to what extent we are pro-cyclical. In a place like Russia, where I think we are pretty much pro-cyclical, if the economy slows down and investment slows down, to what extent will our business slow down? That is irrespective of sanctions, geopolitics or anything else. It is actually just an economic impact. As you know, Neil, this pro-cyclical versus anti-cyclical issue differed in different economies. In some parts of eastern Europe, say in south-eastern Europe, we have played more of an anti-cyclical role, trying to revive economies as they have slowed down or keep them going, whereas in Russia I think the economy is just so large that it is very difficult for EBRD, at its size, really to play that sort of role. That is what I was alluding to, essentially: it could have an impact on our business volumes in a country the size of Russia if the economy keeps slowing because investment then slows. Press Conference

7 MS AGNES LOVASZ: How do you see the Bank s role in Russia in coming years and have you had any pressure from any shareholders on EBRD to change that role? THE PRESIDENT: Thank you, Agnes. Let me just recall what I said at the Roundtable to shareholders. Whatever the future may hold, I strongly believe that the Bank has been a force for good in Russia in terms of helping reform and reformers. If you look at most of what we do in Russia, nearly 90 per cent right now is in the private sector. Under the new country strategy we are moving further east and further south, away from the more developed areas and trying to help the more underdeveloped Russian areas. Russia needs a lot of help in terms of developing infrastructure as well as SMEs and so on. I strongly believe EBRD has done good and continues to do good in Russia. As for the future, and partly in answer to Neil, clearly as the economy slows down, there is pressure on whether we are going to have enough business until the economy picks up again in Russia. In terms of shareholders and geopolitics, I am sure you have read all these statements that are placed outside the Roundtable room, so you can see there are some shareholders that are seriously concerned about, as they perceive it, Russia s behaviour externally in Crimea or eastern Ukraine. That may or may not play out in the EBRD context. At the moment, it has not. The shareholders have very much bought into the argument I made that we have been a force for reform in helping reformers in Russia up to now and that we are a useful channel for dialogue with the reformers and reformists who want their country to be modernised and to change. Mr Pankin made a very strong statement today about the importance of modernisation and reform in Russia and EBRD s role in that and I agree with him about that. Among some of the shareholders that have made these statements, that has not yet played into the EBRD. We will see what the future holds, but not so far and we are therefore continuing to process projects with our staff on Russia. We are very much private sector focused as well. MS MYROSLAVA ZAIETS (Business TV-channel, Ukraine): My question is about investments in the Ukrainian economy. Earlier EBRD declared that it will have invested about $5 billion up to 2020 and now it declares that it will invest $1 billion towards the end of this year. Will you revise the sum of investments that will go to the Ukrainian economy Press Conference

8 and, especially taking into account yesterday s forecast and that the situation in the Ukraine-Russia conflict, could the situation even be worse? THE PRESIDENT: Thank you very much. First, I was using euro rather than dollars. Your point is still an important one. I think the earlier numbers that were given were before we had really got to grips with the extent of the problem. The Ukrainian economy is facing enormous challenges to recover. You heard from Erik Berglöf yesterday about the economic forecasts but, outside oil and gas, we have been the biggest institutional investor in Ukraine. We do have a duty, a responsibility and a role to scale up very significantly. Our current aim right now is 1 billion a year and it will be at that level for a number of years. I cannot predict how long; it depends how long the economy takes to recover, but for as long as it needs to recover and for as long as there are transition gaps and, importantly, for as long as there is reform implementation. You will know better than I do that Ukraine has a history of passing laws and not implementing them and that is the issue and has been the issue for a long time. The legal framework is often all right in Ukraine but actually implementation is poor. Now we have an administration that really wants to make that right and implement the right things. For as long as they do implement reforms, that is the sort of number we are thinking of but we have the headroom to go up higher, if necessary, if the situation demands it. We are not constrained. This is not a target that has to be 1 billion and we cannot go one cent more than that. It really depends, but that is the sort of planning level we are aiming for. That would take Ukraine back to being one of our biggest borrowers. The situation could be getting worse. We will have to wait and see. Clearly, in terms of conflict parts of the economy are fine. The west and centre are unaffected and producing well. Even in the east we have been talking to our clients and many of them are still producing output from their factories. The economy has not closed down in that sense, so we should not over-dramatise that. However, a conflict in any country has repercussions and it has clearly affected Ukraine s export and import sector. That is why the government is very keen to push export promotion to new markets that will not be affected by the conflict. That is why we need to help them do that. MR RAYMOND LLOYD (Parity Democrat, Westminster): I have two questions. In two countries of EBRD operation, Turkey and Egypt, there are tens of thousands of Syrian Press Conference

9 refugees, many of whom in their effort to survive are creating micro businesses. Are these activities that the EBRD could help finance? Two years ago you informed us of your remarkable progress in promoting women in the departments of international development and justice. One year ago you said that this may be more difficult in an international body. Meanwhile we have a woman Managing Director of the International Monetary Fund. Have you increased the number of able women in top EBRD management? THE PRESIDENT: Thank you very much, Raymond. It is always good to see you here. On your first question the Syrian refugee problem is really serious for not only Turkey and Egypt but Jordan and Lebanon. Of our countries of operations, Jordan, Egypt and Turkey, it is Jordan and Turkey that are most affected. If there are bankable projects that involve SMEs as a way of helping absorb some of the pressures in Jordan and Turkey, we would look at those. We are going to open a third office in Turkey in Gaziantep in September. One of the reasons for doing that is partly the economic pressures in that part of the country. It was not being opened because of the Syrian refugee problem we thought of doing it before then but it will be one of the roles that I expect that office to think about. If there are bankable projects, yes; we will not want to do just projects for the sake of it. It is an economic problem but it is also a social issue because of the pressures it is putting on local populations, and we understand that. We have made some progress, I am happy to say, on promoting women. The new Vice President for Corporate Services and Human Resources is here at the back, Luise Holscher. I am very pleased about her appointment and I am also very pleased to have announced the new General Counsel, Marie-Anne Birken, who will be arriving in late June. The new Chief Compliance Officer will be arriving in mid-july, Lisa Rosen. From their names you will gather they are all women! We are making progress, which is good news. Even below those very senior levels I asked my office to do a check the other day on the situation in January 2012 compared with now, and I am pleased to say that there has been progress. I do not have the data in front of me, but there has been quite a significant push. Press Conference

10 Gender is one aspect of diversity but in an organisation like the EBRD it is also about the composition in terms of people from countries of operations and people from non-countries of operation. There has also been progress in the last couple of years and not just at the most senior levels. People tend to focus on Vice Presidents, but the middle tier of management is also changing. There have been a number of promotions and quite a few of them have been women from countries of operations. That is good news. Thank you for continuing to ask me this question every time it gives me a chance to give you a progress report. MR GRZEGORZ SIEMIONCZYK (Polish Daily): I would like to ask a question about the Graduation Policy. Apparently there are a couple of recipient countries that are more or less developed even by the standards of the EBRD transition indicators. I am not only talking of Poland but Latvia, for example. Yesterday the Governor of the National Bank of Poland said that there are some pressures on the EBRD for Poland to graduate, but those countries apparently do not want to withdraw from EBRD financing. From the perspective of the EBRD and its mission does it make any sense to be investing in Poland, Latvia and other developed countries in the coming years? THE PRESIDENT: I am glad that you asked about the Graduation Policy because in the Medium-Term Directions there is a short paragraph about the Graduation Policy and how we are applying it. I am sure we can provide you with the wording. To give a bit of colour on this issue, every shareholder of the EBRD agrees that countries should graduate. This is a bank to help countries access markets in the long term. The point when the transition gaps are filled, when we are no longer additional and naturally when markets can provide the finance, of course they should graduate. Has that point been reached? It was reached in the Czech Republic in It may be reached in a year and a half in the case of Estonia. Estonia has agreed a graduation action plan and is working on that. Even in Estonia it will be assessed closer to the time. Press Conference

11 In the case of the other countries you mentioned like Poland, Latvia and Lithuania and other advanced transition countries, I am of the view that there are still a lot of transition gaps to be filled by the EBRD. Transition has not been completed however wonderful progress has been in these countries. What has happened with the country strategies is that they are increasingly focusing on remaining areas where there is still work to do on transition. In the case of Poland, a good example is the energy sector. Privatisation is another because quite a lot of the economy in Poland is in state hands. There is plenty of work still to do for the EBRD. We must take a country-by-country, evidence-based approach, not a policy-based approach. It has to be evidence that guides us on transition and guides the countries as to when they wish to transition. The Director for Hungary is here and I am sure that he would agree with that approach because it is one we have agreed with the Board and is reflected in the medium-term approach. It is really evidence and a country-based approach that matters. For as long as there are gaps and we are additional, we will be here. MS IAROSLAVA KUTSAI (Ukraine Journal): Mr Chakrabarti, I have a question. In 2013 you approved a 300 million loan to Ukraine s Nuclear Safety Upgrade Programme. Ukraine is known to be heavily dependent on Russia for nuclear technology, fuel and fuel processing. Do you see any other options rather than preserving the current domination of these aging, Russian-dependent energy generating sources? THE PRESIDENT: The focus on the nuclear reactors in Ukraine is all about safety. The Rada has approved the effectiveness of that project. It is not about extending the life of those reactors; it is about making them safer. That is an objective that everyone would agree on: it is best to make these reactors as safe as possible. On top of that you are absolutely right in terms of the need for the EBRD and others to help Ukraine in regard to energy security and different sources of supply. We are looking together Press Conference

12 with the United States and Germany at potential ways of helping Ukraine in terms of gas transit. We have a potential project again in the gas transit area, one we were working on for about three or four years, which we had stopped moving ahead with because we were not happy with the previous government s approach in this area in terms of the reform. We are now going to talk about that project again with the government, but there will be other ideas that we also need to work on in terms of gas storage and so on in Ukraine. You will know this; it is not going to be quick. We cannot turn around the whole energy supply situation in a few months but we all understand it is urgent and this is an area where we have to do a lot more. We also have to provide better connections with existing electricity supply in parts of Ukraine, in rural areas particularly. We are working on various interconnectors as well to try to improve the reliability of power supply. Over the next two or three years this is one sector that will be a very strong part of the Ukraine Country Strategy. We are just about to start working on a new Country Strategy for Ukraine after the presidential election and I think energy will be a centerpiece of that. MR KOLYANDR: Mr President, you have just said that the geopolitical issues have not started to influence the Bank s agenda. However, correct me if I am wrong, your name was on the list of participants this year at the St Petersburg Forum, as it was last year and as it has been almost every year in living memory of this circus. However, and I checked, your name is not on the list of those who will attend. Does that mean you are not coming? Does it mean you are not invited? Does it mean that you have decided not to come and, if so, why? THE PRESIDENT: It is correct that I went last year to the St Petersburg Forum. The previous year it was my predecessor who went; I was not in post. I have been invited this year but it looks unlikely that I will be able to go, largely because I have a pressing engagement elsewhere. I am not the only person who is invited to a number of competing demands. In my office, we always have to juggle the various competing demands and there are other pressing priorities that I have to face up to. You will find out quite soon where I am going to be instead but I will not be in St Petersburg. I have to go somewhere else which is extremely urgent and important for EBRD s business. Press Conference

13 I should mention that just because I am not going, it does not mean that senor management of EBRD will not be there. They will be in St Petersburg. MS AMIRA SALAH-AHMED (Egypt): I have two questions on Egypt. One, EBRD has been expanding its portfolio in Egypt over the past months; meanwhile, it has been asked to scale back or at least hold off signing on any new projects. The reason for that has cited human rights violations as well as a widening crack-down on media freedoms and a slowing down of the transition process, despite the political roadmap moving forward. Could you comment on that and whether EBRD would reconsider its engagement with Egypt in any way? My second question is on the issue of coal. The interim government has recently approved the import of coal for use in the cement industry, despite a campaign against this move and the campaign included the Environment Minister herself who is part of this cabinet. The EBRD has also been asked not to enter into any potential projects related to coal in any way, not just coal-fired plants but also transportation networks, anything related to this move. Could you also comment on that and where EBRD stands? THE PRESIDENT: Thank you very much. First, on the portfolio and what our focus is on Egypt, you are right that we started operations in Egypt in autumn 2012, so we are now a year and a half into that. We have made good progress in terms of building a portfolio of projects. A number of them have come to the Board and have been approved. They have been a mix of private and public sector. One of the things our shareholders gave guidance on is the sorts of project they wanted to see go forward and in the public sector their guidance was: let us make sure that the projects have a good socio-economic purpose, that we can see why they are really required. For example, putting money through a state bank into the SME sector is regarded as very important because SMEs are in the private sector and they help a lot of the disadvantaged and also help the unemployment problem that Egypt faces, particularly youth unemployment. Secondly, a project like the National Railways project, which was recently approved by our Board, again with a state entity obviously: without the National Railways functioning better and you would know this better than I would there is a real problem for the whole Press Conference

14 economy to function. Again, that hits Egypt s citizens more than anyone else. Those projects went ahead because of strong support from our shareholders because of the socio-economic purpose. On top of that, we are also expanding our private sector pipeline enormously in Egypt, so we have a number of private sector projects. We have already approved some but there will be more in the next few months coming to the Board. I expect that part of the pipeline to expand more rapidly now, and there will be a wide range in a number of sectors with great benefits to all Egyptians. On the coal point, I am sorry but I am not aware of this. I have not seen the protest letter. Let me just talk about our approach to these situations. We have an energy sector approach. We also have an Energy Sector Strategy. We also have an Environmental and Social Policy which was very recently approved. We would make sure that our involvement is very much guided by those two pieces of policy that have been agreed with our shareholders. It depends on the nature of the political issue in this regard and I honestly do not know the details to be able to comment. After this, we will try to find someone who covers either Egypt or the sector to come and talk to you. I do not know if Riccardo is around but we can try to find someone to give you a proper answer on that with detail. MR MARC JONES (Reuters): I have a question on the new strategy. You said something about effectively taking a tougher line with governments. Can you give us a little more detail on that? We were talking about transition countries like Poland, but as a result of the tensions in Russia and Ukraine, the countries in this region at this meeting asked you specifically to keep your investments stable at least or even to increase them to help cushion the negative impact on their economies from this situation. THE PRESIDENT: Thank you, Marc. Those are both important questions. On the first one, it is not so much a tougher line with governments, except that it means the EBRD being much more pushy in terms of saying, Look, if you want to re-energise transition, there are a number of things that we all know are required and have been avoided. Let us just take the Press Conference

15 first theme as an example of that. We all know that fighting corruption is a really important thing to do. That means a number of things have to happen. You have to improve the business climate; you have to have to have this independent ombudsman perhaps in certain cases; you have to think about the commercial court system and judiciary; and you have to attack on a number of fronts. What we are saying is that we as an institution should be much more ready (a) to make these points but (b) then to offer some help where there is a willing taker in the form of a government and civil society that really want to implement change in their countries. Ukraine is now the classic example of that but I can give you others. Romania has been criticised for many years for the functioning of its judiciary; yes, there are still quite a lot of problems with the judiciary but Romania today compared with two years ago has made quite a lot of progress in terms of tackling graft and corruption because of its judiciary by the way, mainly female senior judicial leaders, interestingly who have come through. There are examples of that. Serbia now wants to make a major push on institutional reform and corruption. Prime Minister Leanca of Moldova in his speech said that he wants EBRD to come and help on investment climate and governance. We need to go with these reformers and help them much more than perhaps we have done in recent times. On this region, which we call central Europe and the Baltics in our geographical make-up, there is, first, high demand for more EBRD resources; that is absolutely accurate. Against our criteria, are these projects bankable? Are we additional? In other words, would a commercial bank do this, does it need us? Third, does it really help the economy move to a more open-market economy? Does it help transition? On that basis there is a huge unmet demand and we could do a lot more. We are not so much under pressure from the governments of this region to do more, but they made the case that there is this unmet demand and that we are the institution that they would like to see meet it. There are some interesting conversations going on as to whether we can do more in central Europe and the Baltics. Energy security comes up in many conversations right now obviously, but it is across a number of other sectors. Our country strategies are there and in the next few months we will look to see if we can do a bit more in the advanced transition countries whilst sticking to our mandate. Press Conference

16 MR BEN PERRY (AFP News Agency): Can you give an indication of the level of investments in relation to the Cyprus agreement and the public/private split? Can you say why you have set a 2020 deadline? THE PRESIDENT: The level of investment is an indicative number only at the moment, because now that Cyprus has been admitted as a country of operation we need to do a full-scale assessment, a country strategy. Our expectation from our preliminary assessments in the first three months when seeing whether Cyprus qualified is that it will need from us in the order of 500 million to 700 million investment over the period through to That is an indicative number. When the country strategy is approved we will be able to give you a better fix on the right number. At the moment the obvious sectors are the financial sector, the banking sector, which clearly needs quite a lot of help. There are issues concerning corporate restructurings, privatisations and potentially SMEs. Those are the four particular areas that we are thinking of. Privatisation will be a big part of this. It is more the switch from public to private that we need to focus on, which was core EBRD business when we were set up. One of the surprises when we did the assessment to see whether Cyprus qualified was how much of the Cypriot economy is in state hands. It is higher than much of eastern Europe. I do not know if people know that because they assume that it is a eurozone member and part of the European Union and so it must be quite small. Actually, all the ports we use and all the telecoms are in state hands. That is surprising, so there is quite a lot of work to do there. Why 2020? We think this is a more advanced transition economy, and the Cypriots were keen to set themselves a deadline to take the actions. This is very much linked to the troika programme of what we might do in Cyprus. The Cypriots want to get through all the troika programme actions even after the programme ends by 2020, and that fits with issues we might have about privatisation of the banking sector and so on. That is why they wanted to call it a temporary engagement, which makes a lot of sense. It is part of the answer to the question: do countries have a sense of how long they need the EBRD? The Cypriots have a very clear sense of how long they will need us. Press Conference

17 A SPEAKER (Off microphone) THE PRESIDENT: Thank God I did not let you leave with that number! I think people would be rather worried; it would break the Bank. It is 500 million to 700 million between now and I cannot predict how much it will be every year but roughly that. In a few months time we will be able to give you a much better fix on that number because we will have done the country strategy and will have worked out the set of projects that we need to pursue. Watch this space on that. MS YANA ISRAELYAN (IWPR, Georgia): Can you tell us a little bit about Georgia and the stage EBRD projects are at now? THE PRESIDENT: Georgia is a lovely country. That is the first thing to say about it, and I like it very much. As you know Georgia will be hosting the Annual Meting in Tblisi next year. We like to host Annual Meetings in places where we have made a real difference in the country and, secondly, where there is still an agenda to achieve in that country. I believe that that is the case with Georgia. Georgia has been a strong performer in EBRD terms for a number of years but it still needs quite a lot of support. There are a lot of economic and transition gaps. In recent weeks we have approved a number of projects for Georgia including some with new investors. Tata Power has just come into Georgia with a hydro project. Georgia is quite interesting because it looks every way to get investment in and that is part of what the EBRD needs to do as well. The key thing for Georgia now is to develop its vision for 2020 to set out a clear economic approach. What is the economic vision of Georgia and how can we help to fill it? I expect our annual business investment in Georgia this year to be higher than last year by quite a bit. We are finding that new projects are coming through. I am hoping to see the ministers today at some point to discuss how much so I had better not pre-empt that. Press Conference

18 I feel very positive about Georgia. It has a lot of potential as a hub in the region because it is one country that gathers around it Azerbaijan, Armenia, Turkey, that they all trust. That helps quite a lot. MR ANTHONY WILLIAMS: Suma, thank you. If there are any follow-up questions my colleagues from the press unit will be here all day. --- Press Conference