The EBRD is stepping up support for the economies where it invests in the face of the coronavirus pandemic and now stands ready to provide support worth €21 billion over the 2020-21 period.
The Bank has approved a comprehensive set of response and recovery measures including the following five components:
The EBRD is setting aside an immediate €4 billion to support existing clients with much needed liquidity and short-term working capital. The Bank is offering its assistance to all sectors of the economy, but especially those badly hit by the crisis with a focus on small and medium-sized enterprises. They include, but are not limited to, financial institutions, tourism and hospitality, manufacturing and agribusiness. The Bank’s ability to disburse in local currency loans will be fully deployed.
The provision of trade finance is vital to keep up global trade under extremely challenging circumstances. Under its Trade Facilitation Programme the EBRD provided a record level of support in March in response to strong demand. As the availability of commercial trade finance credit lines is likely to remain constrained, new limits and limit increases under the EBRD programme are being fast-tracked.
In response to urgent needs by a growing number of businesses, the EBRD is ready to consider the restructuring of existing commitments which may not require new financial injections but may include changes to existing exposures. This may comprise tenor extensions and changes to the repayment schedule as well as other interventions.
Support for new clients
Dedicating its work to combatting the economic impact of the coronavirus pandemic also means that the EBRD remains open for business for new clients in all its regions and the sectors where it invests. Existing EBRD frameworks can provide much-needed support to small and medium-sized enterprises and corporations, making the real economy more resilient with financing delivered directly and indirectly via the banking system.
The EBRD is introducing a Vital Infrastructure Support Programme to address the enormous pressure the crisis has put on providers to deliver critical services while facing dramatic fall in revenues. The programme will combine short- and long-term financial and policy products and will be available to state-, municipal- or privately-owned providers to secure the continuation of essential services.
The EBRD will focus its support on sectors most affected by the impact of the crisis and it will use well-established practices to deploy its help to the real economy quickly and efficiently directly or through local partner banks.
The EBRD will focus on re-building the sector’s capacity to lend to real sector clients. This will require strengthening banks’ and other financial institutions’ capital and balance sheets, supporting their return to capital markets and helping them to manage their risk. In addition to the provision of debt, equity and trade finance, the Bank will offer support with capital market and structured finance transactions.
Tourism is a vital sector in many EBRD countries of operations and the severe disruption the crisis has caused will heavily impact their economic performance. The Bank will deploy instruments available under the Resilience Framework to support existing clients and continue support the move towards sustainable tourism with strong backwards links to the local and region economy.
The automotive sector has been especially devastated due to its dependence on international supply chains. Enterprises in these sectors will require principal and interest deferrals as well as deeper restructurings and potential liquidity injections to more heavily affected clients.
Disruption to supply chains, concerns over food security and a likely increased role of the state will require significant attention. The EBRD will focus on blended financing for cash-flow assistance to support solvency and preservation of jobs; and emergency package to deliver toolkits and advisory services for companies and resilience advisory, to be implemented jointly with FAO.
The EBRD’s Solidarity Package maintains the Bank’s commitment to its core principals and confirms its approach combining financial intervention with policy engagement and technical assistance.
The EBRD will provide “bridge support” to help clients develop effective responses to the pandemic in order to preserve value and survive. Virtual advice and training is already being offered to help governments identify innovative policy solutions and to clients to assist with workforce planning and crisis management.
At the same time, the EBRD will need to play a systemic role in supporting the broader private sector and well-functioning markets.
The pandemic has the potential to entrench and exacerbate inequalities in society and to jeopardise hard‐fought commitments in the battle against climate change. The Bank will take an inclusive and gender-sensitive approach against any rollback.
The current crisis is a sharp reminder of the impact threats to public health or the global environment can have. If anything, the world must take climate change more seriously than ever. The EBRD maintains its commitment to the green transition of the economies where it invests and can offer specialised products addressing the needs of enterprises reducing cost and increasing efficiency. Looking ahead, the EBRD will consider a green recovery package offering financial incentives for environmentally friendly investments.