EIB underlines importance of sustainable investments at Vienna Initiative Full Forum in North Macedonia

The European Investment Bank (EIB) recently attended the Vienna Initiative Full Forum, which took place from 22 to 24 March 2023 in Skopje. Participants discussed the key challenges for the banking sector in Central, Eastern and South-Eastern Europe, including the changing economic environment and the implications of climate change and digitalisation for the financial system.

The event was hosted by the National Bank of the Republic of North Macedonia (NBRM), and was attended by central bank governors from Croatia, Slovakia, Montenegro and Moldova, and high-level representatives of the central banks of Ukraine, Slovenia, Hungary and Romania, as well as the European Central Bank. Senior representatives of international financial institutions, the European Commission and cross-border banking groups also took part in the meeting.

During the panel on the challenges of monetary and fiscal policy in a high inflation world, EIB Vice-President Lilyana Pavlova said: "Sustainable investment spending from public and private entities will remain the key driver of growth in Europe, and the EIB Group has proved to be a reliable partner to both sectors. Sustainable infrastructure projects must not be delayed, as they make way for a number of activities in the chain that would otherwise not be possible. We must focus investments on renewables, energy efficiency, innovation, and digital and sustainable infrastructure, taking into account the priorities of each country in which we operate."

EIB Chief Economist Debora Revoltella focused on the challenges faced by companies investing in the region, and underlined the importance of the EU bank's leading role in greening the financial sector. Last year, the Vienna Initiative set up a specific working group on climate change to share knowledge and synchronise the activities of central banks, commercial banks and international financial institutions in the region.

EIB Senior Economist Matteo Ferrazzi presented the results of the EIB Bank Lending Survey for Central, Eastern and South-Eastern Europe (CESEE), indicating that banks are facing consistently strong credit demand (from corporates, small and medium businesses and households), but tighter supply conditions, and are signalling higher non-performing loans going forward. According to the survey, bank groups' long-term commitment to the CESEE region (including the Western Balkans) remains strong and, looking at the long term, many banks are signalling a willingness to expand their activities in the region. EIB Department DirectorElina Kamentizer explained the opportunities provided by EIB financing and the Bank's Paris alignment activities.

While discussing the effects of the turmoil in the banking sector, Governor of the National Bank of the Republic of Macedonia Anita Angelovska Bezhoska stressed thatthe world is not dealing with a conventional demand shock that is driving the price surge, but rather with multiple shocks.

"Against this background, central banks need to be humbler. They cannot prevent the first-round effects of many of these shocks, but containing second-round effects and anchoring inflation expectations has to be their focal point. As policymakers, we face a difficult dilemma. After a long period of economic moderation, we are suddenly having to deal with major global shocks that are causing a tectonic shift in the economy, changing conventional macroeconomic paradigms, and accentuating the trade-offs in policymaking. In this current environment, our top priority must be to preserve stability, in particular price stability, and to help stabilise the financial system."

Background information

About the EIB and EIB Global

The EIB is the long-term financing institution of the European Union, owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The EIB supports projects in four priority areas: infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs). EIB Global is the EIB Group's specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner of Global Gateway. We aim to support €100 billion of investment by the end of 2027 - around one-third of the overall target of this EU initiative. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society. EIB Global brings the EIB Group closer to local people, companies and institutions through our offices around the world.

About the Vienna Initiative

The Vienna Initiative was launched in January 2009. Its initial aim was to ensure financial stability in emerging Europe, addressing the outflow of capital from local subsidiaries of large cross-border banks in Central and South-Eastern Europe. It later shifted its focus to the challenges of reducing non-performing loans and monitoring potential credit deleveraging and banks' lending. The private-public dialogue under the Vienna Initiative has contributed to the stability of the banking sectors of Central and Eastern Europe. Close coordination through the Vienna Initiative is particularly valuable at a time of heightened economic and financial uncertainty.

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