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#3 - JRL 9011 - JRL Home
EBRD PRODUCES SURPRISE RATING FOR RUSSIAN ECONOMY IN 2004

MOSCOW, January 11 (RIA Novosti) - Against the backdrop of high-profile claims from Western financiers about a clampdown on Russian business and an economic slump, Jean Lemierre, president of the European Bank for Reconstruction and Development, recently announced that the Russian economy had become more attractive to both foreign and Russian investors last year. Moreover, the bank is ready to give up the practice of taking Russian governmental guarantees for issuing loans to Russian businesses and organizations.

According to Finansovye Izvestia, financing Russian pipeline construction and modernization is one new EBRD strategy the bank is ready to pursue without governmental guarantees. Expanding the pipeline infrastructure may be followed by investment in natural gas production. However, the latter is still subject to the gas monopoly being reformed.

EBRD bankers are also still sticking to their idea of issuing ruble loans to Russian companies.

By crediting and financing Russian business, the EBRD is pursuing two goals: establishing a market of capitals and bolstering small business as a counterweight to big business, and Russia's regions as a counterweight to the capital. When granting loans, the bank will prefer small and medium private businesses to state-owned companies.

The only field where the EBRD is not going to encourage small business is banking and finance. In helping Russia to privatize state-owned credit organizations, European bankers intend to promote mergers and takeovers in the Russian banking sphere. However, in so doing, they will probably favor regional banks.

The EBRD spent about $1 billion on projects in Russia in 2004. According to its estimates, its investment in Russia's modernization in 2005 will increase to $1.1-1.3 billion.