The three largest multilateral lenders to central and eastern Europe (CEE), namely the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank Group, unveiled a joint initiative specifically targeted at helping the region’s troubled banking sectors. The scheme, which could total €24.5bn, is aimed at providing financing to the banks themselves, and directly to local companies hit by the liquidity squeeze in the banking sector.
Four countries in the CEE region, Latvia, Ukraine, Hungary and Belarus, have already signed emergency support programmes with the IMF as their economies slow sharply, threatening bank balance sheets, while Serbia has also requested a precautionary loan arrangement. Georgia received IMF support earlier in 2008, after the conflict with Russia. Heavy foreign currency borrowing in many CEE countries during the economic boom period has added to the risks now that international capital markets are far less favourable.
