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Following approval by cabinet earlier this week, the Minister for Finance, Michael McGrath T.D., will confirm Ireland’s commitment to a capital increase for the European Bank for Reconstruction and Development.
At the 2023 EBRD Annual Meeting last May, the EBRD Board of Governors acknowledged that financial pressures created by the exceptional circumstances of supporting Ukraine would require a specific response requiring additional paid-in capital from EBRD shareholders. Last December, the Bank’s Governing Board approved an overall capital increase of €4 billion. This Capital increase will provide the Bank with the necessary resources to strengthen its operations in Ukraine while continuing to provide support to other countries of operation.
In confirming Ireland’s commitment to subscribe to the EBRD Capital Increase, Minister McGrath said:
“I am pleased to confirm Ireland’s commitment to, and support for, the EBRD capital increase. This capital increase will go substantially towards the EBRD increasing support for Ukraine while maintaining support to all other countries of operation. It will also sustain a financially strong EBRD which is able to pursue its mandate and to meet shareholders’ objectives. Russia’s unjustified and illegal war on Ukraine has shown that the Bank remains as relevant today as it did when it was established over 30 years ago and I believe that our decision reconfirms our support for the Bank and the important role it plays in Ukraine.”
EBRD President Odile Renaud Basso said:
“We are grateful to Minister McGrath and the Irish Government for today’s decision. As Ukraine’s largest international institutional investor, the EBRD maintains its unwavering support for Ukraine and continues to help the country to both reconstruct vital infrastructure and support its real economy. We are all acutely aware of the challenges of maintaining that support, but the Bank has shown itself a very dependable partner over many years, deploying record volumes of investment, pursuing tough but important policy reforms and collaborating closely with our international partners.”
ENDS
Notes to editor
The European Bank for Reconstruction and Development (“EBRD”, the Bank) was established in 1991 to help build a new, post-Cold War era in Central and Eastern Europe and has since taken its distinctive business model to the Caucasus, Central Asia and parts of MENA. The EBRD provides finance and equity for banks, industries and businesses, both new ventures and existing entities. It also works with publicly-owned companies to support privatisation, the restructuring of state-owned forms and the improvement of infrastructure. It was heavily involved in areas such as banking systems reform, the liberalisation of prices, privatisation (legalisation and policy dialogue) and the creation of proper legal frameworks for property rights. As an International Financial Institution (IFI) and Multilateral Development Bank (MDB), the EBRD has a unique private sector focus, aiming for 75 per cent of its business to be with the private sector over the course of the current Strategic and Capital Framework 2021-2025.
The Bank, Ukraine’s biggest institutional investor, was swift to pledge increased support following the full scale Russian invasion in 2022, focussing on energy security, vital infrastructure, food security, trade and the private sector. Its investment programme, put together shortly after the war began, also supports Ukraine’s neighbours, which have been buffeted by the conflict on their doorstep. To date, EBRD has already deployed more than €4 billion of financing since the start of the war to help Ukraine’s businesses and economy keep functioning. Financing for Ukraine has already included emergency liquidity for its railway, gas and electricity companies. It is also one of the partners working on keeping trade routes. Beyond financing, the EBRD continues to support Ukraine’s reform drive – a crucial step not only to unlock further investments from the private sector, but crucially, to progress on Ukraine’s aspiration to become an EU member.
For only the second time since the Bank’s establishment, the paid-in capital increase, amounting to €4 billion, will be financed through cash contributions from Member States. Ireland’s share (0.3%) of this paid-in subscription is €12.1 million and will be paid from the Central Fund over five annual instalments.