Considerations on COM(2024)42 - Subscription by the EU to additional shares in the capital of the European Bank for Reconstruction and Development (EBRD) and amending the Agreement establishing the EBRD as regards the extension of the geographic scope of EBRD operations to sub-Saharan Africa and Iraq in a limited and incremental manner, and removing the statutory capital limitation on ordinary operations - Main contents
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| dossier | COM(2024)42 - Subscription by the EU to additional shares in the capital of the European Bank for Reconstruction and Development (EBRD) and ... |
|---|---|
| document | COM(2024)42 |
| date | April 24, 2024 |
(2) Prior to that capital increase, the Union holds 90 044 shares, each share having a par value of EUR 10 000.
(3) Pursuant to Resolution 265, the authorised capital stock of the EBRD is increased by 400 000 paid-in shares, and EBRD members can subscribe, on or before 30 June 2025, or such subsequent date not later than 31 December 2025 as the Board of Directors of the EBRD may determine on or before 30 June 2025, to a number of whole shares, pro rata to their existing shareholding. The capital increase is to be paid in five instalments, which shall be paid by each member by the later of (i) 30 April 2025; or (ii) 60 days after its instrument of subscription has become effective. The remaining four instalments shall be paid by 30 April 2026, by 30 April 2027, by 30 April 2028 and by 30 April 2029, respectively. Accordingly, the Union will be allowed to subscribe to 12 102 new shares, each having a par value of EUR 10 000 for a total of EUR 121 020 000 increasing the number of paid-in shares of the Union to 102 146.
(4) The capital increase is necessary to enable the EBRD’s continued activities and investments in Ukraine during war and in particular post-war period to support Ukraine’s reconstruction. In supporting those activities, the capital increase also ensures that this effort does not restrict the capacity of the EBRD to meet needs in its other countries of operations. It is consistent with the requirement in Article 13.v) of the Agreement establishing the EBRD that the Bank shall seek to maintain reasonable diversification in all its investments. As a consequence, a paid-in capital increase sustains a financially strong EBRD able to pursue its mandate and meet shareholders’ objectives in all of its countries of operations.
(5) It is appropriate for the Union to subscribe to those additional shares in order to achieve the Union’s objectives in the field of economic external relations and preserve its relative voting power within the EBRD.
(6) Pursuant to Resolution 25918, adopted on 18 May 2023, the Board of Governors of the EBRD voted in favour of the necessary amendments to the Agreement establishing the EBRD, enabling the EBRD to expand in a limited and incremental way the geographical scope of its operations to sub-Saharan Africa and Iraq while maintaining its full commitment to Ukraine and its existing countries of operation. That Resolution confirmed that the extension of the EBRD’s mandate should be achieved without requiring additional capital contributions from its shareholders.
(7) The geographic scope of EBRD operations should be extended in a limited and incremental way to sub-Saharan Africa and Iraq and be fully compliant with the EBRD’s values of supporting those countries that are committed to and apply principles of multiparty democracy, rule of law, respect for human rights, pluralism, and market economics. The EBRD has developed a phased approach to starting its activities in the concerned regions, which will take into consideration the regional and national specificities. First investments in sub-Saharan Africa are envisaged to take place in selected countries from 2025 onwards19. Taking into account the EBRD’s focus on private sector development and its transition mandate, the value that the bank can add in sub-Saharan Africa and Iraq is substantial and of geostrategic importance for the Union.
(8) The representatives of the Union in the governing bodies of the EBRD should encourage the EBRD to continue its close engagement with the Union and collaboration with civil society, as well as to develop further its close cooperation with other European and international public financing institutions, in order to make full use of their comparative advantages, when extending its operations to sub-Saharan Africa and Iraq.
(9) In line with the existing practice, before the EBRD approves a new country of operation, it should make a detailed technical assessment of the economic and political conditions existing in the country concerned, including: an assessment of that country’s commitment to principles of multi-party democracy, pluralism and market economics, as enshrined in Article 1 of the Agreement establishing the EBRD, an assessment of transition gaps, and a review of activities of other international financing institutions in that country and of the priorities in relation to which the EBRD could best make use of its unique knowledge and skills. Such an assessment should, be undertaken subject to any new country applying for the EBRD’s membership and country of operation status and subsequent approval thereof by the EBRD Board of Governors.
(10) By Resolution 26020, the Board of Governors of the EBRD recognised the essential role of the EBRD in addressing pressing global challenges and the recommendations of the G20 Independent Review of Capital Adequacy Frameworks. In order to enable the optimal use of the EBRD’s capital capacity to achieve the maximum potential impact in its recipient countries an amendment to Article 12.1 of the Agreement Establishing the EBRD removing the statutory capital limitation is necessary.
(11) Pursuant to Article 56 of the Agreement establishing the EBRD, the Board of Governors of the EBRD has asked all Members whether they accept the proposed amendments.
(12) The capital increase and the amendments to the Agreement establishing the EBRD should therefore be approved on behalf of the Union,