Russia attacks EBRD lending freeze, says bank is straying from mandate

Wed May 11, 2016 4:02pm EDT
 
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LONDON May 11 (Reuters) - Moscow attacked the European Bank for Reconstruction and Development over its freeze on lending in Russia on Wednesday and said the bank was increasingly moving away from its core mandate.

Russian Deputy Finance Minister Sergei Storchak called the EBRD's freeze on lending "politicised" and "discriminatory." The freeze is likely to be maintained if Western nations decide next month to roll over sanctions imposed on Moscow in 2014 after it annexed the Crimean peninsula from Ukraine.

"In contrast to the sanctions of the EU and some countries aimed at Russian state companies and specific individuals, the EBRD has gone much further in its politicised approach," Storchak said, referring to the blanket ban on all new projects.

"The Bank's discriminatory policy towards our country is also expressed in the tacit ban on cooperation with Russian sponsors in a number of the Bank's countries of operations, which is at variance with free market principles."

The comments came in a statement at the EBRD's annual meeting, which is attended by the development bank's 65 shareholder governments. Russia is one of them.

Storchak also said the bank was going into riskier areas to make up for the absence of projects in Russia and still spending heavily in parts of central Europe even though they are well down the development track. He criticised the bank's moves into euro zone countries Greece and Cyprus as well.

"What we are seeing is a trend towards the erosion of the EBRD's mandate, which expresses itself in a shift of business emphasis towards areas which do not fully correspond to its core function," Storchak's statement said.

"Refocusing the EBRD's business activity on high-risk regions endangers the bank's financial stability."

The EBRD's holdings of bad loans is expected to rise from just under 6 percent to 7.5 percent by 2018, but its finances returned to profit last year.   Continued...