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CEB and Western Balkans Investment Framework:

CEB and Western Balkans Investment Framework: Options for Contribution to Poverty Reduction and Social Inclusion León Herrera. Outline of Presentation. Introduction to the WBIF WBIF general progress to Date CEB’s mandate & resources CEB’s experience & views on the Social Sector

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CEB and Western Balkans Investment Framework:

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  1. CEB and Western Balkans Investment Framework: Options for Contribution to PovertyReduction and Social Inclusion León Herrera 12/04/2011

  2. Outline of Presentation • Introduction to the WBIF • WBIF general progress to Date • CEB’s mandate & resources • CEB’s experience & views on the Social Sector • Opportunities to increase investment in social sector • Conclusion 26/05/2011

  3. WBIF Objectives and Stakeholders Objectives • Coordinate support by Commission, IFIs and donors, to the Western Balkans countries: a single entry point for projects to improve coherence, synergy, efficiency and visibility • Combine/Leverage grants and loans to improve project financing • Support EU Accession process and regional and national policies and strategies Stakeholders • Albania, Bosnia and Herzegovina, Croatia, Kosovo (under UNSCR 1244), FYR Macedonia, Montenegro and Serbia • European Commission • IFIs (CEB, EBRD, EIB) and bilateral financial institutions and donors • World Bank and RCC (observers) 26/05/2011

  4. WBIF Sectors and Structure Sectors • Starting with: Energy, Environment, Transport and Social Infrastructure • From 2011: Private Sector Development and Energy Efficiency Structure • Steering Committee and Project Financiers Group 26/05/2011

  5. WBIF Application and Approval Process Single Entry point Project Identification, Programming, Screening, Assessment PROJECT FINANCIERS’ GROUP Secretariat Single strategic orientation STEERING COMMITTEE Strategy definition, Operations approval, Supervision of action Implementation 26/05/2011

  6. WBIF Implementation Process UE DONORS IFIs Grants Grants Loans IPA Ipf EWBJf Beneficiaries 26/05/2011

  7. Progress to date (1) • 81 grants • Value €139 million • 73 projects • > €3 billion levered IFI loans • > €6 billion total investment 12/04/2011

  8. Progress to date (2) 26/05/2011

  9. Progress to date (3) 26/05/2011

  10. Social Sector Development – CEBunique Mandate 26/05/2011

  11. CEB mandate and the EU 2020 Strategy • The 5 targets on the Europe 2020 strategy (employment, R&D/innovation, climate change, education, poverty/social exclusion) cover CEB overall approach • Three of them (employment, education, poverty/social exclusion) embrace CEB approach to social inclusion in the WB. • Will it be possible to work towards aligning around these targets the views of WB countries, and WBIF partners? 12/04/2011

  12. Other relevant social inclusion objectives CEB and the Commission embrace common objectives on Roma inclusion • “The EU Roma Integration goals are also relevant to Enlargement countries”, (Commission’s communication, April 2011) • CEB has been engaged in Roma inclusion activities for the last 15 years, with loans (€25.9m) and grants (€2.7m) and active participation in awareness and policy events. • CEB stands ready to finance suitable loan projects In 2010, CEB approved a € 8 million project for the « Acceder » programme in Spain, to promote professional training for Roma • This program has been singled out as a model of good practices and his transposition has been recommended to the countries of Central and Eastern Europe 26/05/2011

  13. Social Sector Development CEB Resources Policies • 2010-2014 Medium Term Development’s assumptions: up to 60% of CEB’s loans outstanding in favour of target countries by 2014 with a particular emphasis on the poorest South Eastern countries, (most affected by the crisis) • 67% increase in capital approved in January to back-up CEB’s expanding activities in target countries 26/05/2011

  14. Social Sector Development CEB Resources CEB’s specific means of action (1) • Selective Trust Account:“social dividend” funded through annual allocation of profits to be used (mostly through interest rate subsidies) to respond to high priority social needs. In particular in the poorest target countries. • At the beginning of 2011, € 34.5 m. of grants are available for new commitments. 26/05/2011

  15. Social Sector Development CEB Resources CEB’s specific means of action and resources (2) • 3 Trust accounts to finance technical assistance • The Norway Trust Account: to help the implementation of socio-economic reforms in the WB • The Human Rights Trust Fund: to contribute to the consolidation of the rule of law and protection of human rights. • The Spanish Social Cohesion Account: in support to CEB’s projects mainly in the target group countries • € 2.8 m. of cumulated resources available for new commitments up to date with a clear focus on Eastern Southern Europe countries 26/05/2011

  16. Social Sector Development CEB Experience Decent housing is a basic necessity, it facilitates access to education and health services • Housing: €1.8 bn approved by CEB since 2006 • In November 2010, the Bank approved a project in Serbia in favour of 1,700 households with low and middle income (€32m loan) benefiting from a € 70,000 grant through WBIF 26/05/2011

  17. Social Sector Development CEB Experience …. Over the 5 past years • Education: €1.5bn approved • e.g.  ”the Education Excellence and Equity program”  in Albania in favour of which CEB has approved a €14m loan, completed with a €3.4m interest rate subsidy + grant through WBIF + contribution from the Spanish Cohesion Account (Fiduciary account managed by CEB) • Health: €795m approved • e.g. the on-going project of rehabilitation of the Skodra Hospital in Albania. CEB finances up to 58% of the total cost and grants €0.8m interest-rate subsidy . A grant from the Norway Trust Account has also been approved to cover technical assistance 26/05/2011

  18. Social Sector Development CEB Experience Protection of Human Rights and implementation of the rule of law throughout Europe are at the heart of CEB’s mandate. “ The social cohesion of a society finds its expression in the way it treats its weakest segments”. In response to the recommendations of the 3rd Council of Europe Summit (Warsaw, 2005), the CEB is now financing projects to support infrastructure of administrative and judicial services, aiming for example at the establishment of suitable conditions of detention for prison populations, in conformity with European Prison Rules In the WBIF countries 5 projects are at different stages of implementation • Albania, Bosnia-Herzegovina, Croatia, FYR Macedonia and Serbia 26/05/2011

  19. CEB’s viewson social inclusion • Targetted projects are only effective if they are designed in the framework of universal public policies and inclusive services in health, employment, education, housing. • Targetted policies benefit primarily from their alignement and synergies with inclusive mainstream policies and services (J.M. Fresno, President of Spain’s Council for the Promotion of Equal Opportunities and against Discrimination) 12/04/2011

  20. Economic considerations on social sector projects • The economic impact of social inclusion should be further explored and acknowledged • The World Bank report on the economic impact of Roma inclusion is an excellent example • The impact of education on productivity and competitiveness is well known but should be enhanced • Raising the activity rate (and in particular of women, and aged men in an aging Europe), is tightly connected with better health and living (housing) conditions 12/04/2011

  21. Financial considerations on social sector projects • Strong externalities in social inclusion projects require a specific approach • Weak or no income generation is a common feature, therefore the need for grants/lower leverage is higher • Ownership at all levels has proved to be the basis of a succesfull project, therefore a certain degree of budget/loan co-financing will be an element towards good results 12/04/2011

  22. The social sector and the impact of the crisis Impact of the crisis on social inclusion: • Increasing number of jobless people • Stretched capacities of current social systems • Social projects tend to be relegated vis-à-vis income generating projects • Important role of the Commission to ensure a minimun of ressources and political attention to social issues 12/04/2011

  23. WBIF – Opportunities to Increase Investments in the Social Sector - So far, estimated investment in the social field is only 11%, although needs for social infrastructure are crucial (as pointed out in DG Enlargement’s country reports) How could WBIF support more strongly this sector in the future? 26/05/2011

  24. WBIF – Opportunities to Increase Investments in the Social Sector - • Better identification of high priority projects • Ministries in charge are invited to be more proactive and propose potential projects to NIPACs • Giving more visibility to social needs at all levels, including WBIF • Social issues should be more precisely singled out 26/05/2011

  25. In Conclusion • Importance and awareness of social sector must be reflected in the number/volume of projects financed through WBIF. A proactive role of concerned ministries in the Western Balkan countries is essential. • Challenges: budgetary constraints, new IPA sectoral approach: how to fit it with the project approach used by some IFIs • RCC, Council of Europe, World Bank, CEB ready to help beneficiaries to better define priorities. CEB, EIB and other IFIs and bilateral FI to help beneficiaries to materialize priorities into results. • Importance of liaising with NIPACs and coordinating with other important sources of funding: IPA national programmes, bilateral donors. 26/05/2011

  26. Thank you for your attention 26/05/2011

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