The European Bank for Reconstruction and Development (EBRD) is one of the international financial institutions which holds utmost importance to Bulgaria.

Since its establishment in 1991, the EBRD has actively supported Bulgaria's transition to an open market-oriented economy. It has provided assistance in the implementation of structural reform, promoting competition, privatisation and entrepreneurship.

The bank has exerted its positive influence on the Bulgarian economy in two ways - through investment and example. According to the bank's latest financial report, between 1992 and 2000, it invested a total of 482 million euros into Bulgaria. The bulk of this money, over 61 per cent, was targeted at the private sector. There, the EBRD provided not only precious financial resources but also set an example of western-style management, badly needed after half a century of government suppression.

The EBRD has covered nearly all segments of the Bulgarian economy. "The bank has a broad portfolio. Arms and tobacco are the only areas where the EBRD has no interest," said Ben Atkins, press officer for Southern and Eastern Europe. As of December 31 last year, the bank had invested in industrial enterprises (computer software, chemicals, pulp and paper, food processing, wine and diary), financial enterprises (banking, insurance, investment and trade), and infrastructure (power, telecommunications and transport).

Among the key guiding principles of the EBRD's investment strategy is additionality. "The bank usually invests in consortia. We try to support strategic investors, both foreign and domestic, by providing the security of our financial backing and regional expertise. We do not want to push other prospective investors to the sidelines," said Atkins.

While it has invested 482 million euros on its own, the projects where the bank inserted money mobilized a total funding of 1.7 billion euros.

The EBRD's landmark investment project in Bulgaria was the privatisation of Sodi Devnya AD, worldwide leader in the production of soda ash. The bank contributed $40 million to an investment project whose value was estimated at $231.5 million. They participated in a consortium with Solvay S.A, the second-largest industrial company in Belgium, and the Turkish glass manufacturer Sisecam. The project remains one of the largest privatisation deals in the country.

Another guiding principle of the EBRD's investment strategy has been transition impact. "The bank participates in projects whose terms and conditions are set to have great impact on the Bulgarian economy," explained Atkins.

The Sodi Devnya privatisation deal is a strong illustration of this strategy. The transaction occurred two months after the coming to power of a western-oriented, reformist government, which inherited a severe economic crisis that had crippled the economy. The EBRD backed its participation in the deal with the argument that it would contribute, through its success, to supporting the new policy of privatisation and help attract increased interest in Bulgarian assets by other potential investors. And indeed it did. In 1997, foreign direct investment (FDI) in the country surged 148 per cent to $636 million. Ever since, FDI has continued to increase, reaching $1.1 billion in 2000.

This year, the EBRD is set to expand its business in Bulgaria. By the end of March the bank is expected to announce two investment projects involving Balkanpharma Holding, a leading domestic pharmaceutical producer, and Eurobank, a financial institution with a specific focus on medium and small enterprises. The total investment of the EBRD in the projects is estimated at 34.45 million euros, roughly half of the bank's investments in Bulgaria last year.

"We're set to expand our business in the countries that push reforms," said Atkins.