UPDATE 1-EBRD to vote on funds for Cyprus, membership for Libya

Fri May 9, 2014 11:42am EDT

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LONDON May 9 (Reuters) - The European Bank for Reconstruction and Development said on Friday it would vote at its annual meeting next week on making Cyprus a temporary recipient of funds and on admitting Libya as a member, a first step to receiving funds.

Euro zone member Cyprus suffered from the euro zone debt crisis. Libya is trying to rebuild its economy following the overthrow of Muammar Gaddafi.

Cyprus has asked to be a temporary recipient of funds "to reform and restructure the Cyprus economy," the EBRD said in a statement. Speaking to reporters, the bank's head, Suma Chakrabarti, said a total of 500 million-700 million euros of funding had earmarked for the next six years.

Libya has also asked to be a member of the bank as a first step to receiving finance. The EBRD's shareholders, the biggest of which are G7 governments, are expected to approve the plans when they meet in Warsaw on May 14-15. Any steps to establish recipient status would start after the Warsaw meeting."

The bank added that new economic forecasts published next week would show "significant deterioration" in the outlook for Russia and Ukraine and a worsening picture for Turkey.

"One of the reasons is the fallout of the Russia-Ukraine situation," Chakrabarti said. "Another reason for the general anemic recovery is that the euro zone recovery is still taking time. It has not been quite as quick as hoped."

The bank, which focuses on private-sector funding, said it will urge further reforms in the emerging Europe and north Africa region in which it operates.

It is set to sign an anti-corruption pact with Ukraine before the meeting on Monday. That will include creating an ombudsman to monitor business dealings to try and stamp out wrongdoing.

The bank invested 2.3 billion euros in the region in the January-April 2014 period, versus 1.4 billion euros in the same period in 2013.

Russia is by far the biggest recipient of its funding. Chakrabarti said so far there was no pressure to cut its dealings with Russia because of tension between Russia and Ukraine. "We are carrying on processing projects (in Russia) in the normal way," he said. (Reporting by Marc Jones and Carolyn Cohn)

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