IFC Not Counting on Greek Exit From Euro Area, Ellena Says
The International Finance Corp., the World Bank’s private-sector lending arm, is not betting on Greece leaving the Euro area, said Guy Ellena, IFC Director for Manufacturing, Agribusiness and Services for Europe, Middle East and North Africa.
Uncertainty in Europe may increase demand for the Washington-based lender’s funds, Ellena said in an interview in Belgrade yesterday. Grece’s election on June 17 will determine whether Greeks, in a fifth year of recession, accept open-ended austerity to stay in the euro or reject the conditions of a bailout and risk the turmoil of becoming the first to exit the 17-member currency.
“No, we are not counting on the Greek exit,” Ellena said. “We know a further deterioration in the Euro zone, whether because Greece is going out or staying in, has an impact on peripheral economies and countries like Serbia, Croatia or Ukraine. They are very dependent on what’s happening in Europe.”
The Balkan region, which depends on the European Union for economic expansion, has been hit as the euro region’s debt crisis cuts demand for their exports and the banks tighten lending over concern that Greece may abandon the single currency bloc. The World Bank has slashed economic growth forecasts for all Balkan countries, including Serbia, Croatia and Bulgaria.
The IFC is “looking at what could be an impact on our portfolio, but these are our projections,” Ellena said. “My sense is that maybe there will be half-solutions.”
The IFC, along with the European Bank for Reconstruction and Development and other multilateral lenders, will “come increasingly in demand to compensate for the lack of liquidity or the lack of risk capital from local banks” at a time when long-term funding is not readily available and investors are “a bit cautious about putting money,” he said.
The IFC expects lending to Europe, Middle East and North Africa to expand to as much as $6 billion this year, a 20 percent increase on the previous year, to include all the manufacturing, agribusiness, services and financial market transactions, he said. Financing of agribusiness alone will range from $320 million to $350 million, he said.
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