Iliana Tsanova, Deputy Managing Director of EFSI: Development banks are catalyst for investments in different sectors
Thank you very much for inviting me to take part in this important initiative - this topic is very dear to me since I dedicated 15 years of my career to the development of banking. We are aware of our region being in the process of development and now, in my new position in EFSI, I am fully aware of what needs to be done to match the level of development to those of the rest of Europe. There is a debate that has been held for a long time: about the role of development banks, about their role in attracting private capital and on the other hand about the use of the capital markets’ infrastructure.
As it was already mentioned, the amounts, invested in the digital infrastructure and technological change, are trillions. These investments amount to 1.5 trillion worldwide, with 60% being invested into the developed countries. In order to reduce the huge differences, we need to unite the efforts of development banks and private investors. Development banks are a catalyst for investments in various sectors and the most natural investors on specific projects with the greatest development effect possible .What we need to put thoughts into is mobilizing and attracting as many private sector members as possible, by providing public funds as a guarantee leading to private investors feeling more comfortable to invest more. Of utmost importance here is the value-added principle, because the private sector does not need to be stimulated by the funds of public banks when taking on investments with high returns. The EC and the European Investment Bank are trying to prepare one priority list of projects. There is one at this moment for 1.3 trillion. What we have to do from now on is: it is obvious that we must increase the role of financial institutions for development, convince the Member States’ governments that they have to change the climate and to make the climate more attractive to investors, adhere to strict social, ecological and economic principles.
When it comes to capital markets or investment platforms, we need to have enough data in terms of risks and returns. It’s widely considered, that these are high-risk investments, while in fact this is not true. Let us mention the initiative of OECD and EIB, which combines data from all national development banks, analyzes them and provides this information.
Therefore: there are no limits, there is no upper limit for the development of the national development banks and there are liquid funds available on the capital markets.
Therefore, first I would advise public banks to turn to the capital markets. Investing in projects that are not only of national importance for Bulgaria but also for neighboring countries will attract investors. At the moment, a project that links, for example, Bulgaria with Serbia, Bulgaria with Romania or other countries, takes years. And this should not be the case.