|The Commission increases the Risk Capital Facility for the Mediterranean countries|
|The Commission has decided to increase by € 22 million the Risk Capital Facility for the EU Mediterranean neighbours that benefit from MEDA funding (Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, West Bank and Gaza Strip) with a view to upgrading their financial sector, making their industry more competitive and supporting privatisation.
Priority will be given to those countries or territories that have already signed an Association Agreement with the EU.
The Risk Capital Facility, managed by the European Investment Bank (EIB), is a key instrument of EU support in enhancing the economic transition and strengthening the development of the private sector of the MEDA countries. This € 22 million will be added to the € 50 million already granted to these countries in 2001 and it is envisaged to grant a further €28 million in 2004.
The implementation of the Risk Capital Project may take place either through reliable and solid local national or sub-regional financial intermediaries including local banks and investment funds or through non-financial companies. Priority will be given to the countries having signed an Association Agreement with the EC and support given to the implementation of a credible programme of actions towards opening up the economy of these countries and towards deeper regional and sub-regional co-operation and integration.
The "Economic and Financial Partnership" chapter of the Barcelona process identifies 3 objectives: firstly, the creation of a Free Trade Area between the EC and the Mediterranean partner countries, secondly, support for economic transition towards this Free Trade Zone and thirdly encouraging investment. In this regard, the Risk Capital Facility project being implemented by the European Investment Bank will focus on the objectives of upgrading the financial sector of the partner countries in the Southern Mediterranean and the Middle East, on the objective of raising the competitively of partner countries' enterprise sector and will put emphasis on the objective of privatisation.
Mediterranean partners' economies are hampered in the openingup of their economies by various factors including weak international competitivity resulting from past protectionism in the areas of foreign trade and foreign investment, financially vulnerable companies surviving thanks to high protection and domestic financial systems operating outside market-based mechanisms and a dominant sector of state enterprises operating also outside market-based mechanisms.
Whilst these economies need to unleash new economic forces, and indeed to draw heavily on foreign technology and financial resources, in order to follow a path of much-higher-than-present growth rate, this upward shift in the long-term growth curve requires major structural adjustments all around. The Risk Capital Facility project is intended to help the Mediterranean partner countries that are actively pursuing economic restructuring, by specifically supporting:
competitive restructuring and strengthening of the balance sheets of local companies, with priority being given to outward-oriented businesses ;
restructuring of the financial sector in an open market economy context with a view to promoting financially strong, accountable and prudentially healthy financial intermediaries, to enhancing the efficiency of service and financial product diversification, and to developing partnerships with regional and European financial intermediaries that would underpin stronger trade and investment relations ; and
elimination of public monopolies and privatisation of state enterprises where the competitive marketplace can produce goods and services more efficiently.
Brussels,03 17 2003