Accessibility links

Breaking News

Eastern Europe: Official Warns Against Reliance On Foreign Investment

Prague, 25 March 1997 (RFE/RL) -- Bart le Blanc, vice president of the European Bank for Reconstruction and Development (EBRD), today warned leaders in Eastern Europe that they should not rely exclusively on foreign investment for economic growth. Le Blanc told a forum of international bankers and financial leaders in Prague today that domestic savings must be "the cork on which economies float."

But Le Blanc said banking reforms are necessary before East European savings will be sufficient. He says key reforms include stronger capital bases, skilled loan officers, trustworthy managers, effective supervision and risk disclosures. He also stressed that banks should stop all "party-related lending" -- especially without reliable "credit assessment."

Le Blanc said growth requires investments equal to 20 percent of a country's Gross Domestic Product (GDP). He said Eastern Europe needs about $15 billion of investment each year. But he says total foreign investment in the region since 1990 has been only $24 billion, with most concentrated in the Poland, Hungary, the Czech Republic and Russia.