EFSE Expanding to Four More Countries of the European Eastern Neighbourhood Region

EFSE to Include Armenia, Azerbaijan, Georgia and Belarus

FRANKFURT AM MAIN, December 17 - In an agreement reached at yesterday's general meeting, the
shareholders of the European Fund for Southeast Europe (EFSE) approved an
expansion of the Fund's target region to include four new countries of the
European Eastern Neighbourhood region: Armenia, Azerbaijan, Georgia and
Belarus. This paves the way for the EFSE to provide financing for micro and
small enterprises (MSEs) and home improvement in these countries, in addition
to Ukraine and Moldova, two other European Eastern Neighbourhood countries,
and further eight countries in Southeast Europe, where the EFSE has operated
since 2005.

The expansion will enhance the level of financial
intermediation in the new target countries and will bring much-needed
financing, especially to MSEs in rural areas and to the private small-scale
agriculture sector.

Over the next five years, the EFSE is expected to provide
financing to banks and microfinance institutions in a total amount of EUR 300
million in the new target countries in addition to up to EUR 1 billion
envisaged for the region of Southeast Europe. In doing so, the Fund will
provide financing for approximately 70,000 loans to MSEs in the new target
countries.

The decision made at EFSE's General Meeting of Shareholders
has received immediate backing from the Fund's shareholders to commit
significant contributions to the Eastern European Neighbourhood: The European
Union, through the Neighbourhood Investment Facility (NIF), which was
launched by Commissioner Benita Ferrero- Waldner mid 2008, has contributed
today an amount of EUR 10 million to benefit all six countries of the
European Eastern Neighbourhood through the ENBF, a dedicated European
Neighbourhood Window under the EFSE. An additional EUR 15.75 million has been
made available by the German government, represented by the Federal German
Ministry for Economic Cooperation and Development (BMZ), for the South
Caucasus (of which EUR 4.75 million are dedicated for Azerbaijan). The
Development Bank of Austria (OEeB) has currently committed a total of EUR 3
million C Shares (first-loss tranche of the Fund) for investments in the
European Eastern Neighbourhood countries, with increased investments foreseen
in the near future.

"The ENBF we are launching today is fully in line with the
objectives of the Neighbourhood Investment Facility - NIF - since the ENBF
improves access to finance for micro, small and medium enterprises and
supports the development of local capital markets in the region", said
Richard Weber, Deputy Director General of EuropeAid (EU Development
Cooperation Office), "The ENBF is another example for the added value the NIF
provides by pooling together grants with loans from European Finance
Institutions. With the ENBF, we strongly support the objectives of the
Eastern Partnership, especially regarding economic and social development and
we further strengthen the cooperation and coordination in the Eastern
Neighbourhood region in general."

Dirk Niebel, Federal Minister for Economic Cooperation and
Development (BMZ), Germany, said: "The new German government is committed to
modernising and de-ideologising Germany's development policy. Its top
priority is to enable people in our partner countries to take their lives
into their own hands and to build sound prospects for themselves for decent
living conditions and prosperity. I firmly believe that microcredit is one of
the best ways of triggering such self-sustaining, self-reliant development. I
will therefore make microcredit a strong focus of my term in office. We
consider the expansion of the European Fund for Southeast Europe to include
the Caucasus region and the provision of additional budget funds of EUR 15.75
million the first step towards that goal. We will soon take further steps in
the form of microfinance initiatives for Africa and for the MENA region."

"The Development Bank of Austria - OeEB - has already invested
EUR 33 million in EFSE, which has an excellent track record. The new EFSE
region attracts the interest of the Austrian government, corresponds to one
of OeEBs focal areas, and reflects the growing interest of Austrian companies
in the region. All these aspects led to the additional investment decision",
explained Josef Proll, Finance Minister of Austria.

"Micro and small enterprises play a crucial role in the growth
of developing and transition countries due to the employment opportunities
they create", said Dr. Norbert Kloppenburg, Member of the Managing Board of
Directors of KfW. "The EFSE helps to counteract the current post-crisis
downward trend in lending to these businesses, and ensures that they continue
to act as a job engine, enabling poor people to access finance and escape the
poverty trap."

This has become an increasingly important topic, especially in
rural and semi-urban areas in the new target countries where the financial
crisis has caused banks to close branches in an effort to cut costs. In
Azerbaijan, for example, almost two thirds of all MSEs are located outside
urban areas, and operate in the agricultural field. The financing gap in
these areas has been increasing and has implied negative consequences for
these segments of the economy.

Dr. Klaus Glaubitt, Chairman of EFSE's Board of Directors,
commented: "The regional expansion is another significant milestone for the
EFSE and demonstrates the German, Austrian and other donor governments', the
European Commission's as well as international finance institutions' and
private investors' confidence in the Fund. The Public-Private Partnership
model of the Fund has proven its strength and robustness, particularly
throughout the financial crisis, and is generating a clear development
impact."

About the European Fund for Southeast Europe (EFSE)

The European Fund for Southeast Europe (EFSE) is a
microfinance investment fund which has an investment portfolio of EUR 559
million (as of 30 September 2009). Established in 2005, the EFSE's goal is to
foster economic development and prosperity in the region of Southeast Europe
the European Eastern Neighbourhood countries. To that end, the EFSE offers
long-term funding instruments to qualified local financial institutions for
on-lending to micro and small enterprises (MSEs) and low-income private
households. EFSE website: www.efse.lu/

    Media contact
    Mr. Samir Djikic
    Manager Communications
    Tel: +49(0)69-977-876-50-26
    E-mail: info@efse.lu
    www.efse.lu

Media contact: Mr. Samir Djikic, Manager Communications, Tel: +49(0)69-977-876-50-26, E-mail: info at efse.lu