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EBRD facilitates commercial lending in Bosnia and Herzegovina
The European Bank for Reconstruction and Development (EBRD) has continued its support for Bosnia and Herzegovina’s economic recovery by providing a credit line to encourage the growth of the country’s small and medium-sized enterprises (SMEs).
Three local banks - Hrvatska Banka, Market Banka and Upi Banka - have been selected as intermediaries under a DM 30 million (EUR 15.3 million) framework, which will provide SMEs with access to medium to long-term financing on commercial terms. The EBRD is providing DM 20 million (EUR 10.2 million), with the remaining DM 10 million (EUR 5.1 million) being provided by the Italian Government, which is also providing a DM 3.1 million grant to fund a technical assistance package for the banks.
"It is very important for the international community to help the economy of Bosnia and Herzegovina become more commercially focused and we are grateful for Italy’s support for this project," said Kurt Geiger, the EBRD’s Business Group Director for Financial Institutions. "Since the end of the war in 1995, the economy has remained dependent on grant or highly concessional finance, which is not sustainable over the long term. This credit line will establish an additional and more sustainable channel of finance and will strengthen three key banks. Two more banks are expected to receive financing under the framework in the first quarter of 2000."
The EBRD will lend EUR 5 million to Hrvatska Banka, EUR 2.5 million to Market Banka and EUR 2.5 million to UPI Banka. The EBRD is currently a shareholder in both Hrvatska Banka and Market Banka.
The framework will support not only private enterprises but also the privatisation of state-controlled businesses. It will contribute to the development of the banking sector by promoting good corporate governance, and by strengthening the institutional capacity of local private banks.
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