55thth Vienna Economic Forum Vienna Economic Forum

Role of the Investment Development Role of the Investment Development Bank of the Republic of Srpska in the Bank of the Republic of Srpska in the

Economic Development of the Republic Economic Development of the Republic of Srpskaof Srpska

Republic of SrpskaRepublic of Srpska

RS Ministry of FinanceRS Ministry of Finance

10-11 November 200810-11 November 2008

Republic of SrpskaRepublic of Srpska

• Covers an area of 25.053 Covers an area of 25.053 square kilometerssquare kilometers

• The Republic of Srpska has The Republic of Srpska has

a population of 1.471.529a population of 1.471.529

• Member of Assembly Member of Assembly

of European Regionof European Region

Economic figures Economic figures

• Gross Domestic Product (in nominal terms) in 2007 Gross Domestic Product (in nominal terms) in 2007 amounted to EUR 3.75 billion amounted to EUR 3.75 billion

• 2007 GDP growth rate amounted to over 13.2% in nominal 2007 GDP growth rate amounted to over 13.2% in nominal terms, 6.5% in real termsterms, 6.5% in real terms

• Expected GDP growth rate in 2008 of 11.7% in nominal Expected GDP growth rate in 2008 of 11.7% in nominal terms and 7.2% in real terms (est.)terms and 7.2% in real terms (est.)

• Profit tax Profit tax 10%10%

• Income taxIncome tax 10% 10%

• Health and social insurance contribution are 28% (gross)Health and social insurance contribution are 28% (gross)

Economic figuresEconomic figures

• Share of public spending in GDP in the Republic of Srpska Share of public spending in GDP in the Republic of Srpska below below 40%40%

Causes Causes ::• efficient budget policyefficient budget policy• efficient public spending policyefficient public spending policy

• Share of debt (internal and foreign debt) in GDP in the Share of debt (internal and foreign debt) in GDP in the Republic of Srpska below Republic of Srpska below 40%40%

• In last three years primary surplus amounted to 1.5% of GDPIn last three years primary surplus amounted to 1.5% of GDP

• Competitive advantages Competitive advantages • Agriculture Agriculture • Hydro potential-electric energy sectorHydro potential-electric energy sector

Activities in 2007 Activities in 2007

• Successful privatization of Telekom Srpska – Total proceeds of Telekom privatization amount to EUR 644 million

• Adopted Development Program of the Republic of Srpska 2007-2011– The Economic-Social Program EUR 303 million (47%)

Socially-useful public investments. Grant funds - realization through the budget system o the RS

– The Industrial-Development Program EUR 341.3 million (53%)Profitable public investments- realization through Investment-development banks and its Funds

• Founded Investment-development Bank of the RS

Investment Development Bank of the Investment Development Bank of the Republic of Srpska (RS IDB)Republic of Srpska (RS IDB)

• The RS IDB is registered as a Joint Stock Company, The RS IDB is registered as a Joint Stock Company, 100% owned by the Republic of Srpska100% owned by the Republic of Srpska

• The RS IDB is not deposit bankThe RS IDB is not deposit bank

• Conducts business operations with all banks registered Conducts business operations with all banks registered at the territory of the Republic of Srpskaat the territory of the Republic of Srpska

– Provided availability of capital to commercial banks for credit linesProvided availability of capital to commercial banks for credit lines

– Commercial banks invest funds to end users in line with RS IDB Commercial banks invest funds to end users in line with RS IDB credit linescredit lines

• The strategic objectives of the RSIDB are encouragement of The strategic objectives of the RSIDB are encouragement of investment and fostering of development in the Republic of investment and fostering of development in the Republic of SrpskaSrpska

RS IDB RoleRS IDB Role

• Efficient and professional management of the Republic of Efficient and professional management of the Republic of Srpska assets formally and legally registered with six funds Srpska assets formally and legally registered with six funds

• Providing of support to development and investment projects in Providing of support to development and investment projects in the Republic of Srpskathe Republic of Srpska

• Achievement of synergy effect in resource management of the Achievement of synergy effect in resource management of the Republic of SrpskaRepublic of Srpska

• Support to the acceleration of reform processes and economic Support to the acceleration of reform processes and economic development of the Republic of Srpska (keeping in mind the development of the Republic of Srpska (keeping in mind the social and environmental aspects)social and environmental aspects)

Global Organization of RS IDBGlobal Organization of RS IDB

RSIDB

Fund for Real Estate and

Claims Management

Share Fund

Housing Fund

Fund for Development of the Eastern part of the Republic

of Srpska

Restitution Fund

Development and Employment

Fund

Main Features of the RS IDBMain Features of the RS IDB

• Highly professional financial institutionHighly professional financial institution

• Portfolio value Portfolio value –– over EUR 1.3 billion over EUR 1.3 billion

• Investment of over EUR 300Investment of over EUR 300 million over the next million over the next three yearsthree years

• Active participation in capital market Active participation in capital market

• Privatization of state capital in companiesPrivatization of state capital in companies

RS IDB ActivitiesRS IDB Activities

• Credit lines Credit lines

• Trade in securitiesTrade in securities

• Privatization and restructuringPrivatization and restructuring

• Identification and promotion of investment Identification and promotion of investment potentials of the Republic of Srpskapotentials of the Republic of Srpska

Credit LinesCredit Lines Investment through commercial banks and microcredit companies:Investment through commercial banks and microcredit companies:

1.1. For start-up activitiesFor start-up activities

2.2. For micro-business in agriculture For micro-business in agriculture

3.3. For agricultureFor agriculture

4.4. For entrepreneurs and companies For entrepreneurs and companies

5.5. Housing loansHousing loans

6.6. For units of local self-governanceFor units of local self-governance

Reduced interest rate forReduced interest rate for: projects implemented in the territory : projects implemented in the territory of underdeveloped and extremely underdeveloped municipalities; of underdeveloped and extremely underdeveloped municipalities; clusters; projects in the field of processing industry and energy clusters; projects in the field of processing industry and energy production; tourism and exportersproduction; tourism and exporters

Interest on creditsInterest on credits invested from funds managed by RS IDB to end invested from funds managed by RS IDB to end users are users are 4,00-7,4,00-7,5050 % %

Trade in securitiesTrade in securities

- Management of Bank portfolioManagement of Bank portfolio

- Portfolio restructuringPortfolio restructuring

- Maintenance and expansion of capital valueMaintenance and expansion of capital value

- Significant participant in capital marketSignificant participant in capital market

Privatization and restructuringPrivatization and restructuring

- Acceleration of privatization process by means of Acceleration of privatization process by means of sales in stock exchangesales in stock exchange

- Active participation in financial restructuring of Active participation in financial restructuring of companiescompanies

- Directing of sales revenues Directing of sales revenues ((further strengthening of further strengthening of companies and capital marketcompanies and capital market))

- Participation in corporate governanceParticipation in corporate governance

Identification and promotion of investment Identification and promotion of investment potentials of the Republic of Srpskapotentials of the Republic of Srpska– Cooperation with International Financial Institutions Cooperation with International Financial Institutions (EBRD, WB, (EBRD, WB,

EIB) on support for credit lines EIB) on support for credit lines – WillingnessWillingness for joint financing for joint financing of relevant projects for the RSof relevant projects for the RS

– Attractive projects Attractive projects – – companies being privatizedcompanies being privatized;; private companies private companies (joint ventures); (joint ventures); infrastructureinfrastructure; ; natural resourcesnatural resources

- Attractive locations Attractive locations – – greenfieldgreenfield and and brownfieldbrownfield investments investments ((database database of attractive locations in municipalitiesof attractive locations in municipalities))

- Business mediation Business mediation – – matchmaking between local and foreign matchmaking between local and foreign

investorsinvestors

- Support to investors Support to investors – – database for foreign investors database for foreign investors ““Invest in the Invest in the RSRS”,”, business counsel business counsel, , contact facilitationcontact facilitation,, financial support financial support

Contact information Contact information

Mladena Stojanovića 7Mladena Stojanovića 778000 Banja Luka78000 Banja LukaRepublic of SrpskaRepublic of Srpska

www.irbrs.net

Phone: +387 (0)51 334 751, +387 (0)51 334 706Phone: +387 (0)51 334 751, +387 (0)51 334 706Fax: +387 (0)51 347 090Fax: +387 (0)51 347 090

Republic of Srpska Welcomes You Republic of Srpska Welcomes You

as a Place for Your Future as a Place for Your Future InvestmentsInvestments