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					                 CEB and Western Balkans
                 Investment Framework:
                 Options for Contribution to
                 Poverty Reduction and
                 Social Inclusion

                 León Herrera

1   12/04/2011
            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

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WBIF Objectives and Stakeholders
• 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
• 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)
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      WBIF Sectors and Structure

• Starting with: Energy, Environment, Transport and
  Social Infrastructure
• From 2011: Private Sector Development and
  Energy Efficiency
• Steering Committee and Project Financiers Group

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     WBIF Application and Approval
                     Single Entry point

                  PROJECT FINANCIERS’
    Secretariat         GROUP
                  Single strategic orientation

                  STEERING COMMITTEE              Strategy definition,
                                                 Operations approval,
                                                 Supervision of action
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    WBIF Implementation Process

      Grants           Grants


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         Progress to date (1)
• 81 grants

• Value €139 million

• 73 projects

• > €3 billion levered IFI loans

• > €6 billion total investment
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    Progress to date (2)

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    Progress to date (3)
         Estimated Investment
         Total: 6.84 billion euros

          Environment   9%

    Social 11%

                     Transport 62%

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 Social Sector Development – CEB
          unique Mandate
                                                                   SECTORS OF ACTION

                                         - Aid to refugees, migrants and displaced persons
                                         - Housing for low-income persons
 Strengthening social integration
                                         - Creation and preservation of viable jobs
                                         - Improvement of living conditions in urban and rural areas

                                         - Natural or ecological disasters
 Managing the environment                - Protection of the environment
                                         - Protection and rehabilitation of historic and cultural heritage

                                         - Health
 Supporting public infrastructure with
                                         - Education and vocational training
 a social vocation
                                         - Administrative and judicial public service infrastructure

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     CEB mandate and the EU 2020
• 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?
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      Other relevant social inclusion
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

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     Social Sector Development
          CEB Resources
 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

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       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

 At the beginning of 2011, € 34.5 m. of grants are
  available for new commitments.

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      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

       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

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        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
• 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

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        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
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
  Albania, Bosnia-Herzegovina, Croatia, FYR Macedonia and Serbia

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                         CEB’s views
                      on 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,

• 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)

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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

20                       12/04/2011
     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

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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

22                          12/04/2011
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?

23                     26/05/2011
 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
 Giving more visibility to social needs at all
  levels, including WBIF
• Social issues should be more precisely
  singled out
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                     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
 Importance of liaising with NIPACs and coordinating with other
  important sources of funding: IPA national programmes,
  bilateral donors.

25                             26/05/2011
     Thank you for your attention

26               26/05/2011

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