WASHINGTON, D.C., Nov. 4—The International
Finance Corporation (IFC) today announced it will provide a loan of up
to DM8.8 million (US$5.2 million equivalent) for Sarajevska Pivara, d.d.,
the largest brewery in Bosnia and Herzegovina (BiH). The financing will
be used to diversify the firm's product range to include soft drinks and
introduce new packaging for its products. The project will boost the company's
efficiency and competitiveness. It will also create further employment,
foreign exchange savings, and improved distribution and supply networks
of consumer goods for the BiH population.
Sarajevska Pivara's facilities were severely damaged by mortar shells during
the war. Although production never stopped, it was reduced to a small fraction
of its former capacity. Despite a limited source of raw materials and impaired
access to markets, the firm is now operating at about forty percent of
its pre-war capacity and has made significant progress in re-establishing
its sales and distribution capabilities. "Almost four years of strife
seriously damaged Bosnia and Herzegovina's economy and brought industry
to a near standstillsaid Mr. Harold Rosen, Director of IFC's Europe I Department.
"The IFC investment in Sarajevska Pivara will provide a critical boost
and diversification to the company's production," . It will also provide
a much needed success story for private investment in the country and improve
investors' perception of the general business environment in Bosnia and
Sarajevska Pivara was established in Sarajevo as a private entity in 1864.
In 1947 the firm was nationalized. In 1990, Sarajevska participated in
a national privatization program whereby the State's ownership stake was
partially privatized through purchases of shares by management and employees.
Sarajevska produces beer, carbonated water, and carbonated soft drinks.
In addition to the IFC financing, Sarajevska Pivara will receive loans
of up to DM5 million (US$3 million equivalent) from domestic financing
institutions. Preparation of the loan was assisted through a financial
audit of the company funded by the Government of Italy under the IFC-Italy
Technical Assistance Trust Fund.
In April 1996, Bosnia and Herzegovina formally assumed membership of the
World Bank Group. Since then, the Bank Group has taken a leading role in
reconstruction of the country and, with the European Union, is coordinating
all donor support.
IFC, a member of the World Bank Group, is the largest multilateral source
of equity and loan financing for private sector projects in developing