Page last updated at 13:55 GMT, Tuesday, 8 September 2009 14:55 UK

Europe raises aid to hardest hit

Thomas Mirow, EBRD president
The EBRD has increased its investment sharply this year

The European Bank for Reconstruction and Development (EBRD) will invest a record 8bn euros ($11.6bn; £7bn) in central and eastern Europe this year.

The EBRD raised the amount from the 7bn it pledged in May as it seeks to tackle the economic downturn in the region.

The bank was established in 1991 to aid countries in central and eastern Europe as they shifted to a market economy after communism.

Many of the countries in the former Soviet bloc are in deep recession.

In particular, figures on Tuesday confirmed how badly the Baltic states were coping.

Estonia's gross domestic product - its total economic output - shrank at an annual rate of 16.1% in the second quarter, revised up from the initial estimate of 16.6%, official figures released earlier showed.

In Latvia, where the government is cutting spending to qualify for International Monetary Fund and European Union aid packages, the economy shrank 18.7%, up from 19.6% as originally estimated.

Lithuania's economy contracted 20% in the same period.

"The economic environment continues to pose a challenge for many in our region but the EBRD is well-equipped and ready to continue to provide support where it is most needed," EBRD president Thomas Mirow said.

The money is being spent in infrastructure, energy, corporate and finance projects.



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