BELARUS NEWS AND ANALYSIS

DATE:

16/01/2007

EBRD Will Continue To Boycott Belarusian Government

LONDON -(Dow Jones)- The European Bank for Reconstruction and Development Tuesday said it will continue to boycott projects in which the Belorussian state has a declared or covert involvement.

In its latest, two-year strategy for the country, the EBRD said it will continue to focus instead on lending to small businesses in order to support the emergence of "a dynamic private sector and an entrepreneurial class."

But it noted once again that the government of President Alexander Lukashenko continues to fall far short of required standards for adherence to the principles of multiparty democracy, pluralism and market economics.

"Weak mechanisms of accountability, constraints on political competition and lack of political will to uphold constitutional guarantees of basic civil, political and human rights continue to raise serious concern within the international community," the EBRD said.

The European Union Monday said local elections held over the weekend failed to meet democratic standards, displaying "a blatant lack of democratic pluralism."

The development bank - which was established in 1991 to help countries in Eastern Europe and the former Soviet Union make the transition to market from centrally planned economies - was also critical of the course of recent economic policy.

In particular, it cited a law on "golden shares" that gives the government the right to take control of private enterprises as "a serious concern."

"The state continues to dominate the economic environment through budget and off-budget financing, support to enterprises through state-owned banks, and various targets imposed on enterprises," the EBRD said. "The privatization process remains stalled, and the state regained its stakes in some formerly privatized enterprises. Private enterprises experience excessive regulation and a high tax burden."

The EBRD said it will continue to ensure that none of its money finds its way into the hands of the state or individual government officials.

"Under current conditions, the EBRD sees providing enhanced support for private sector development as the most appropriate way for the bank to maintain and grow its engagement in Belarus," the development bank said. "As under the previous strategy, all EBRD operations must demonstrate that proposed investments aren't effectively controlled by the state or state entities."

The EBRD has invested EUR185 million in Belarus, more than three quarters of which has gone to private sector financial institutions. The development bank said it is "actively working" on a proposal to create a microfinance institution in the country.

Source:

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070116%5cACQDJON200701161044DOWJONESDJONLINE000440.htm&