President of BSTDB: The region of Black Sea in the path of sustainable development

by Aria Koutra & Nikos Lambropoulos

The President of the Black Sea Trade and Development Bank forecasts medium growth in the region even though he concerns that: “ the Region is diverse in resource endowment, economic structure, level of development, it represents a centrally located geographic continuum of enormous strategic importance and economic potential, possessing significant resources and high quality human capital”.

Regarding Greece, Mr. Delikanli said that since the start of operations the Bank has signed 18 operations in Greece for over EUR 335 million and he also underlined that the Bank does not exclude Greek banks from its pool of potential clients.

The Director of EurActiv.gr, Nikos Lambropoulos and the journalist Aria Koutra interviewd Mr. Delikanli.

After several years of steadily declining economic outturns that resulted in recession, 2016 represented a turnaround for the Black Sea Region, with collective growth reaching 1.0%, and most countries experiencing notable upturns relative to output levels achieved the year before. Given the stable macroeconomic environments achieved by BSTDB member countries, indications are that moderate, positive growth should prove sustainable, although financial and geopolitical uncertainties from outside the Region will continue to affect the Black Sea Region.

With higher global growth expected in 2017 (2.7% according to the World Bank and 3.4% according to IMF) and in 2018 (2.9% and 3.6%), emerging markets and developing economies continue to grow faster than advanced ones.  In the Black Sea region, the average GDP growth projections increased recently and now stand at 2.3%. Lower volatility of commodity prices, and in particular a moderate increase in the price of oil would also be helpful for some regional economies.

There are differences, but the EU non-EU distinction is not determinant. Although the Region is diverse in resource endowment, economic structure, level of development, it represents a centrally located geographic continuum of enormous strategic importance and economic potential, possessing significant resources and high quality human capital. The outlook for the Region as we move forward is largely positive, although some downward risks persist. The Region is well integrated in the global markets, and is therefore vulnerable to sudden shifts in interest rates, commodity prices and world trade patterns.

How do you see the rolε of the local authorities in the area, regarding cross-border cooperation and inter-regional projects in the public and private sector? Does your bank support directly projects for regions and cities?

We work with public entities and plan to expand the share of public sector operations in the Bank’s portfolio in the future. Municipalities and local authorities more generally, are some of our preferred cooperation partners for promoting development at the local level. Local authorities have responsibilities for the well-functioning of local institutions and promotion of investments in social and physical infrastructure that provide quality services for the local population. We would be happy to contribute to financing of operations that are economically sustainable and financially viable. Cross-border cooperation and support for intra-regional projects is part of the raison d’être for BSTDB, and we have a good record of financing such operations.

Cumulatively from the start of operations in 1999, BSTDB has approved over 100 SME operations for a total amount of EUR 974 million. Today, we have 39 SME operations for a total of EUR 232 million, representing 20% of the outstanding portfolio. Given the fact that we are headquartered in Greece, which facilitates our contact with locally incorporated commercial entities, we used to enter into direct contractual arrangements with Greek partners. Since the start of operations the Bank has signed 18 operations in Greece for over EUR 335 million, apart from financial support provided to Greek companies expanding their activities in other member countries. However, the Bank does not exclude Greek banks from its pool of potential clients. On the contrary, we have explored various possibilities to engage with Greek banks in the past, and we are currently considering financing opportunities.

Your Bank has been awarded as the “Best Regional Development Bank” in Southeast Europe for 2017. How difficult is it to support growth and investments in this area?

To its core activity of providing financing to new investment and trade operational activities, BSTDB also places great importance to promotional and knowledge raising activities that improve understanding of the Black Sea Region and its many assets and opportunities. The Bank needs to be flexible, in order to be able to adapt in ways that continue to fulfill the institution’s dual mandate to promote regional cooperation and economic development. This requires adjustments to the often rapid changes in our operating environment and to the evolving demand for our products.

Regional conditions are favorable for Bank operational activity - BSEC region is on path of growth, but due to market volatility and high risk perceptions, capital inflows from abroad remain subdued. This paradoxically favors IFIs like us, which become attractive partners for investors. With trade flows recovering, the Bank may wish to pursue more aggressively opportunities to increase trade finance activities via intermediaries, but also directly.

*European Business Review with EurActiv.gr