European public banks fail on transparency

In the first-ever Aid Transparency Index [1] launched today by UK-based campaign group Publish What You Fund, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) score extremely poorly on transparency. “Considering that the EIB is ranked as ‘poor’ and the EBRD as ‘moderate’, European citizens can only guess where these banks spend their publicly backed money” says Desislava Stoyanova, Counter Balance coordinator.

The Aid Transparency Index puts the EIB on the 37th place out of the 58 assessed actors, significantly behind other international financial institutions including World Bank – IDA (1^st) and the African Development Bank (3rd). Its score of barely 26% is mainly justified by the limited project information the EIB provides. Additionally the EIB operates largely outside the aid effectiveness framework and does little to engage with the agenda at a country level [2]. This increases the risk that EIB loans counteract efforts from other donors and makes it extremely difficult to measure the impact of its loans.

“Given that the EIB wants to play an increased role in development finance it must really act now on demands made by MEPs [3] and civil society to be more democratic, transparent and accountable”, says Karin Christiansen, Managing Director of Publish What You Fund. “What better way to signal this intention than to follow the lead of the African Development Bank – and the European Commission – by signing up to and implementing the International Aid Transparency Initiative?”

Stoyanova: “A public institution that refers to itself as the ‘EU Bank’ should be able to present outstanding results in terms of transparency. This study confirms our previous claims. The EIB’s loans through financial intermediaries such as commercial banks or private equity funds pose particularly large transparency problems [4].”

The EBRD ranks 15th out of the 58 international organisations and governmental agencies disbursing aid. “The problem with the EBRD is that it fails to offer sufficient, early information about the projects it supports to affected local communities and civil society groups,” says Bankwatch’s Fidanka Bacheva-McGrath. “In recent years it has also increasingly withheld information on projects in the natural resources sector before approval, using excuses about commercial confidentiality. Too often, disclosure of crucial information is left up to the project implementers. A further problem is the lack of any data about the concrete environmental and social results of EBRD-financed projects.”

Notes for editors:

[1] The Aid Transparency Index is available here: http://www.publishwhatyoufund.org/index
[2] The EIB has not signed up to the principles in the Paris Declaration and is not part of the monitoring or evaluation framework.
[3] As part of the conditions for extending the bank’s external lending mandate, a vast majority of MEPs have called for transforming the EIB into a more democratic, transparent and accountable institution.
[4] For previous studies on the EIB’s lack of transparency we refer to the Counter Balance reports ‘Hit and run development’ and ‘Corporate welfare and development deceptions’.