DONOR REPORT 2014

The EBRD relies on the support of donors to fulfil its transition mandate. More than ever, these partnerships contribute proactively to our strategic agenda. Since the establishment of the Bank, we have shared with our donors the same democratic values and economic development goals. In 2014, as we commemorated the 25th anniversary of the fall of the Berlin Wall which set the scene for the Bank’s existence, donor partnerships continued to help us reach out to entrepreneurs, policy-makers and communities in our region to improve their environment and their economies.

Donor contributions play a vital role in addressing transition gaps, providing grant co-financing and deploying technical cooperation (TC) funds—for example, to enhance the skills of local bankers and commercial lawyers, to support project investment and to develop risk-sharing financial instruments.

For instance, thanks to donor commitments a vital hydropower plant in Tajikistan is being refurbished to secure a source of green energy capable of coping with the effects of climate change; in Albania many businesswomen will have easier access to advice and loans through local bankers who we have trained to provide ad-hoc financing; and in Morocco we are supporting the expansion of drinking water supply services and encouraging local community involvement through a stakeholder-participation programme.

Such projects illustrate how EBRD bilateral, multilateral and global partnerships are at the heart of our operations. Grant funds, which totalled over €340.6 million* in 2014 (another record year of support), are an integral part of our business model. Both our established activities, such as the Early Transition Countries (ETC) Initiative, and new programmes launched in 2014 – such as the Small Business Initiative (SBI), the Infrastructure Project Preparation Facility and the Investment Climate and Governance Initiative – are reliant on donor support. We also aim to be more involved in policy dialogue to drive systemic change, and these ventures will likewise rely on donor funding.

Donors help us make a real difference across the range of sector activities, from infrastructure financing to small business support, from developing financial institutions to addressing climate change. With regard to climate finance, EBRD investments reached a record €3 billion in 2014 and have amounted to over €15 billion since the launch of the Bank's donor-backed Sustainable Energy Initiative (SEI). Our involvement of the private sector, policy regulators and the donor community in tackling this pressing challenge makes the EBRD an important global player.

In addition, donors have strongly supported the Bank’s engagement in the transition of the southern and eastern Mediterranean (SEMED) region, where in 2014 investment generated by the EBRD reached a milestone figure of €1.5 billion. Meanwhile, in response to a volatile political and security environment in Ukraine during the year, donors set up a new multi-donor account in support of reforms and sustainable growth in the country.

Donors help shape the Bank’s policies and practices. We continue to reform our donor-related management processes to ensure that grants have the greatest impact for beneficiaries and reflect donors' development priorities. Key achievements in 2014 included revising our cost-sharing policy to secure client commitment to donor-funded projects. To improve our funding structures, we merged a number of funds and are closing down inactive accounts. We also introduced standardised legal frameworks for relations with donors such as Austria and Switzerland, and are preparing a similar arrangement with the European Union (EU), the EBRD's largest donor. Furthermore, we set up the Post-Graduation Special Fund which places an emphasis on business development activities to support cross-border investment in eligible EU-8 countries*. We are also improving the measurement and impact assessment of our work on the ground. These efforts will continue apace into 2015.

Donor support will also be crucial for the medium-term directions that the Bank set in 2014 to re-energise transition. In order to encourage stronger growth and higher living standards, the Bank will focus on making market reforms more resilient, on promoting greater regional and international integration and providing an effective response to challenges such as climate change and food security.

This report presents an overview of the Bank's work in support of economic development and free-market transition. It is a tribute to the donors that help us and to the people with whom we invest to achieve a more prosperous and sustainable future.