Brexit will not affect lending to Caribbean – EIB Vice President

With the European Investment Bank (EIB) set on rekindling bilateral relations with Guyana by investing in some major projects here, there are some concerns of its financial capability in light of the fallout between the United Kingdom (UK) and the European Union (EU) following June’s historic vote on the ‘Brexit’ referendum.

On June 23, 51.9 per cent of the UK voted to leave the economic trade bloc. This was despite a 48.1 per cent vote from London, Scotland and Northern Ireland, who were backing to stay within EU.

Since then, there have been many uncertainties about the future relation between the UK and Guyana and consequently the EU and Guyana. However, both UK and EU officials here have assured that this will not affect relations with Guyana nor the Caribbean region.

This assurance was reiterated by Vice President of EIB responsible for lending in the Caribbean, Pim van Ballekom, who told the local media during a press briefing on Friday that there will be no difference in the money that is available for lending by EIB to the Caribbean as a result of the UK’s intention to leave the EU.

“We don’t have specific amounts available for specific countries or regions or projects or sectors. We are looking to the quality of the project and if it’s in answer to our balance sheet, then we will put it in our balance sheet.”

Having pointed out that the UK’s exit from the EU would result in less money being available for lending by the bank, Ballekom explained that the EIB has other shareholders and is eager to pick up those shares. He added too that the bank finances itself on the capital market so in that sense, it will not be a problem.

Nevertheless, he noted that EIB is very saddened with the possible loss of a major shareholder but stated that there are other investors that it can capitalise on:

“It’s always a pity to lose a strong shareholder, that is for sure, but we will continue to do business and that is the purpose of the bank. But I’m pretty sure that there are other member states who are willing to pick up the shares.”

On this note, the VP recalled in the 1990s, where 10 member states joined the EU and at that time, their economies were quite small. He however pointed out that those economies have done quite well since then and their economic shares in the Gross Domestic Product (GDP) of the EU are now comparable to the era surrounding the 1990s.

“So I could imagine that those countries are interested to pick up more shares,” he added.

Moreover, Ballekom outlined that there is no certainly about what is going to happen in the near future as it relates to Brexit, having regards to the fact that the UK is a shadow of the European Investment Bank:

“I’m told, but I’m not a politician, that the negotiations on Brexit could take two or three years before an ultimate agreement is signed and I don’t know if our political leaders will decide that the UK has to sell their shares…if they are obliged to sell then we will go to length to United Kingdom via a mandate,” the banking executive declared.

To this end, Ballekom outlined that there is expected to be some sort of an arrangement with the UK to continue lending to the EU economy, not as a member state but as a third country: “But let’s see what happens, up to now it’s pure speculation what is going to happen but it will not influence our commitment or activities in the Caribbean.”

Furthermore, the VP highlighted that the EIB also lends to non-EU members like Guyana as well as to Turkey, where it has a portfolio of 2.5B a year.