31 Billion Dollar Pledge for Central and Eastern Europe

 Now that even Eastern and Central Europe are reeling from the effects of the global financial crisis, there were three major lenders that said last Friday they are going to pledge around twenty four point five billion Euros, roughly the equivalent of thirty one billion United States dollars, for a two-year period in order to rescue the businesses in both regions. Ever since the Berlin Wall’s fall, both economies of Eastern and Central Europe enjoyed a boom. Such a boom was propelled by the habit of borrowing from their Western banks - which are currently having a rough time dealing with the debt issue and the tight credit market.

Deployment Plans Headed by Banks

Last Friday, it was reported that a meeting took place in order to discuss how the situation could be solved. The meeting was composed of European Bank for Reconstruction and Development heads, the World Bank and the European Investment Bank. In a statement, they cleared that the plan was designed to deploy a large-scale, rapid and perfectly coordinated financial assistance measure. It intends to provide support by lending funds to a lot of small- to medium-sized businesses.

As the head of European Bank for Reconstruction and Development in London, Thomas Mirow has a few things to say about this. For several years, according to Mirow, there is the growing integration of the whole of Europe. This could be traced as a source of their success as well as mutual benefit, and that efforts must be made to ensure that such a process will not be reversed. This plan was announced last Sunday, when the European Union was preparing for their emergency meeting in order to figure out how their banks could play a rescue role in the crisis.

Forms of Rescue

These three banks also mentioned that the financing scheme they are looking into for Central and Eastern Europe might come in the form of debt and equity finance. Other rescue attempts in this proposal also include issues such as political risk insurance and credit lines. Robert B. Zoellick, the acting head of the World Bank, released a statement regarding the matter. According to him, now is the perfect time for Europe to band together in order to make sure that what the nation has achieved over the past twenty years will not be in vain just because of the economic crisis.

Such a plan would therefore commit the European Bank for Reconstruction and Development into providing around six billion Euros to several financial institutions as well as in the area of trade finance. There was also a pledge by the European Investment Bank of eleven billion Euros in forms of loans to both small- and medium-sized enterprises while the World Bank is looking into pledging seven point five billion Euros.