| Project Detail |
The regional debt resolution programme supports Albania, Bosnia and Herzegovina, as well as Serbia in their efforts to improve the effectiveness and efficiency of insolvency resolution arrangements. The programme is implemented by the International Finance Corporation (IFC). Background The Western Balkans region was hit hard by the financial crisis affecting local economies through raised food prices, decreased foreign direct investments, slower export flows, diminished amount of remittances and significantly weakened domestic demand. The GDP growth has stalled similar to most of the Western economies. The banking sector was affected significantly, which led to an increase of the rate of non-performing loans (NPL) in the local banks. This rise in NPLs across the region are reducing credit supply and therefore constraining the ability of SMEs to ease their liquidity shortfalls and grow. Objectives Overall, the programme aims at improving the effectiveness and efficiency of insolvency resolution. At the aggregate level, effective insolvency reform is associated with a lower cost of credit, increased access to finance, improved creditor recovery, and will thus ideally lead to increased job preservation, promotion of entrepreneurship, and other benefits for small businesses. Medium-term outcomes Improve the legislative and regulatory environment. Expedite the restructuring of viable firms in financial distress, thus preserving viable businesses. Increase the returns to creditors, measured as a percentage of recovered assets. Improve the efficiency of asset allocation from failed businesses to more productive ones. Increase the confidence among lenders and improve access to credit for new and existing businesses, in particular small and medium-sized enterprises. Results Expected results: Government agencies received advisory services. New laws/regulations/amendments/codes were drafted. Workshops, training events, seminars and conferences were organised. |
