AmCham Montenegro EBRD Business Breakfast November 28, 2012

1. AmCham Montenegro EBRD Business Breakfast November 28, 2012 RAMADA Podgorica

2. EBRD as a partner and investor • Giulio Moreno Sunday, 10 August 2014

3. Table of Contents • What we do • Where we operate • EBRD Rating, Portfolio, Capital • Montenegro (Economic Outlook) • EBRD in Montenegro • How to Obtain EBRD Financing • Local Enterprise Facility (LEF) • Western Balkan Sustainable Energy Direct Financing Facility (WeBSEDFF)

4. What we do • The European Bank for Reconstruction and Development (EBRD) was established in 1991 - headquarters in London. • Created to support development of market economies after the collapse of communist regimes. • Present in 33 countries - Central Europe, Central Asia and South and East Mediterranean. • Board of Directors - represents shareholders from 63 countries plus the European Union and European Investment Bank. • Kosovo to become 66th member of the Bank; • Every investment must: • Support the further development of sound market economies; • Assume certain level of risk to support private investors; • Follow sound banking principles; • Strengthen sustainability;

5. Where we operateMay 2012

6. EBRD Rating, Portfolio, Capital • Triple-A credit rating, portfolio of €35 billion and total capital of €30 billion. • Record level of investment achieved in 2011, over €9 billion in 380 projects. • 77% in the private sector; • 3,400projects since inception in 1991, cumulative business volume over €70 billion. • Primarily involved in projects of the private sector, in order to serve the transition to market economies and democratic societies.

7. Montenegro (Economic Outlook) • Economic performance has weakened substantially. • Still struggling to recover from the effects of the financial crisis. • 2010 and 2011 - on its way to a modest but steady recovery mainly driven by exports and tourism - countering the drop in FDI inflows and an on going credit crunch. • 2012 – Significant fall in GDP growth= 0.3% projected, external demand has weakened substantially as a result of the impact of the eurozonecrisis, combined with weak domestic demand. • 2013 – Negligible projected GDP growthof 0.8%, higher than in 2012, yet lower than projected SEE average of 1.6%.

8. Montenegro (Economic Outlook)

9. Montenegro (Economic Outlook) • Current account deficit remains high, at around 20% of GDP. • Industrial production is volatile and negative. • Uncertainty over the future of KAP, Montenegro’s largest enterprise and exporter. • Financial sector – high level of NPLs, bank lending activities continue to shrink, more rigorous loan approval process. • Total bank assets declined by 1.7% y/y basis, mostly due to drop in gross loans of 4.2%y/y (Oct 2012); • The fiscal position has been weakened - activation of state loan guarantees related to KAP and weaker than expected growth. • Public debt was close to 50% of GDP as of August 2012. Ability of the Government to absorb additional debt to finance infrastructure projects is limited;

10. Montenegro (Economic Outlook) • On a positive note... • Membership to WTO (Dec 2011) and the decision of the European Council to endorse the European Commission’s recommendation (Jun 2012) reflects substantial and sustained progress in reforms in both the political and the economic spheres. • Visible progress should help to attract further FDI and ultimately boost the country’s growth prospects; • Fiscal policies have become more prudent in the past couple of years. • Success in managing the sale of the steel company in Niksic to a Turkish investor. • Infrastructure gradually improving, and further development is needed to support the expanding tourism industry. • Important steps have been taken to develop Montenegro’s energy potential (i.e. Tariff reforms, underwater interconnection cable). • Deleveraging of the financial sector in the past year and reduction of NPLs from 21% in 2010 to 15.5% in mid-2012.

11. EBRD in Montenegro • Net cumulative business volume of €295 million. • Corporate (agribusiness, manufacturing and services, property and tourism and telecommunications); • Energy (natural resources and the power sector); • Financial sector (investments in micro, small and medium-sized enterprises via financial intermediaries); • Infrastructure (municipal environmental infrastructure and transport);

12. EBRD in Montenegro • 2011 – Five projects signed, over €43 million in value. • 2012 – Five to seven projects of €30 - €35 million, four already signed, additional projects to be signed by the end of the year. • 2013 – Six to ten new projects, over €130 million in value, negotiations already underway: • Loan facility for the power transmission company CGES (co-owned by Terna); • Loan facility to EPCG – Montenegrin producer and distributor of electricity, co-owned and managed by A2A; • Continue to focus on infrastructure development, with a growing emphasis on the wider private corporate sector - energy sector (efficiency improvements, conventional and renewable energy), property and tourism, agribusiness, financial institutions, etc.

13. How to obtain EBRD financing • Large private sector projects • Private sector projects from €5 million to €250 million. • The average amount is €25 million. • Small projects • Private sector projects from €1 million to €10 million, primarily financed through LEF (Local Enterprise Facility). • EBRD also supports financial intermediaries, such as local commercial banks, micro‑business banks, equity funds and leasing facilities. • Energy Efficiency and Renewable Energy – financed through Western Balkan Sustainable Energy Direct Financing Facility (WeBSEDFF). • Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia, and Kosovo;

14. Local Enterprise Facility (LEF) • Eligible investments: expansion, restructuring or acquisitions of existing private businesses. • Eligible sectors: a wide range of sectors, with only few exceptions (weapons, liquors and tobacco). All investments must be in line with sound environmental principles. • Size of investments: up to €10 million (EBRD participation). • Type of investments: equity, quasi-equity and debt financing. • Target Stake (for equity): [preferably] in the range of 20% to 35% of the capital of the company. • Time horizon: 3 - 8 years. • Pre-investment process: 3 - 9 months.

15. Western Balkan Sustainable Energy Direct Financing Facility (WeBSEDFF) • Eligible investments: • Renewable Energy - predominantly greenfield projects of up to 10 MW) – run-of-river hydro power plants; wind farms; solar PV plants; biomass projects, etc. • Industrial Energy Efficiency – on site co- or tri-generation; rehabilitation of boilers, compressed air systems and steam distribution systems; chillers; installations for heat recovery from processes; various other EE improvement measures or combinations of them. • Size of investments: €2 million to €6 million. • Incentive payments: 10% reduction of the outstanding loan principle upon project completion. • Time horizon: 6 - 8 years for energy efficiency and 12 - 15 years for renewable energy projects, with appropriate grace periods and flexible repayment schedules. • Pre-investment process: 4 - 9 months.

16. EBRD Contact • EBRD – Montenegro Office • T.C. Palada • Serdara Jola Piletica bb • 81000 Podgorica • Tel: +382 20 237 173/174/175 • Fax: +382 20 237 195 • Giulio Moreno, Head of Office • Vasilije Jaukovic, Associate Banker

17. Thank You!

18. AmCham Montenegro EBRD Business Breakfast November 28, 2012 RAMADA Podgorica