London, 14 April 1997 (RFE/RL) -- Hundreds of government representatives, bankers and financiers are in London for the annual meeting of the European Bank for Reconstruction and Development.
The two-day meeting, which formally opens this morning, will focus on the economic progress of the 26 countries in which the EBRD operates. The EBRD was set up in 1991 to help the former communist countries make the transition to market economies and democracy.
Some 4,500 people are expected at the London meeting -- including many from the eastern countries. Much attention is expected to focus on the state of the economy in Russia, whose recovery is seen as vital to help the eastern economies boost their exports.
In its latest progress report, the EBRD says "recent developments in market-oriented reform suggests that the investment climate is improving in most countries of the region."
But it says that "significant challenges remain in deepening reforms, maintaining stability and adapting institutions and behavior" to further enhance the investment climate in the eastern countries.
The report cites the recent economic turmoil in Bulgaria as an illustration of the dangers of delaying structural reform.
Ronald Freeman, the EBRD's outgoing first vice-president, told a news conference last night that some of the East and Central European countries have made great advances since he began work in 1971.
Freeman, who has been in charge of the EBRD s investment banking activities, said Poland, the Czech Republic, Slovakia, Hungary and Slovenia are no longer marginal markets but "they have emerged.'
He said: "The Czech Republic and several of the other countries have better credit ratings than countries that are members of the EU or donor countries of the EBRD."
However, he said the Czech Republic has caused some concern by failing to combat financial fraud. "Dishonest people took advantage of honest people in a financial sense," he said.
He said that Western capital markets are today much more accommodating about lending to the countries in transition.
He said that banks have "moved in a quantum way" since 1991 when East and Central Europe was largely regarded as a "scary market" with a general perception of "communist crazies and tanks in the streets."
"Only a few years ago investors were terrified (about putting money into the region). This is not the case any more," he said.
Freeman said the EBRD is likely to focus more of its efforts in future on the Caucasus, Central Asia and Balkans which have "advanced less far on the road to transition." (The former Wall Street banker is to visit Kazakhstan next week).
Freeman said the countries in transition still face many problems. He said Belarus is struggling with the legacy of heavy industrialization based on the old Soviet structure; Albania is grappling the collapse of its disastrous pyramid selling schemes; while Ukraine still confronts the problem of what to do about the Chernobyl nuclear power plant.
He said Bulgaria needs to make faster progress in simplifying "its tremendous levels of bureaucracy" to enable businesses to take off.
He urged Bulgaria to establish proper regulation of its banks so the EBRD can put money into them.
In addition, persistently high unemployment in many countries, and the non-payment of workers, remains a worrying problem.
The progress report before today's meeting says that only the fast-track reforming countries in central Europe and the Baltic have reached or are in sight of the steady four to six percent annual growth needed to reduce the gap in living standards between the two halves of Europe.
But more countries are heading for economic recovery as the accumulated experience of the last few years underlines the importance of strengthening financial, legal and other market-oriented institutions to create a firm basis for future growth.
The EBRD report says that economic growth is one of the benefits of the transition process and that success tends to breed further success by luring further higher investment. It says higher productivity, linked to privatization and foreign investment, is the key to sustainable growth.