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EBRD makes small even more beautiful
€10 million loan to support small municipalities in Slovenia
The EBRD is providing a €10 million loan to Abanka, Slovenia’s third largest bank, for financing small municipalities, their municipal companies and private companies providing municipal services. The finance will increase the borrowing capacities of municipalities and allow them to make urgently needed infrastructure investments.
With a territory of 20,273 km2 Slovenia is among the smaller countries in Europe, its size being roughly the same as Wales or half the size of Switzerland. It stretches from the Julian Alps to the Adriatic Sea and proves the old adage that small is beautiful. The country is divided into 205 municipalities of which 186 have fewer than 20,000 inhabitants.
Many small municipalities were only created in recent years and have small budgets for building and maintaining their relevant infrastructure. It is here that the EBRD loan will make a big difference by providing long term finance that was previously unavailable in the form of credits with maturities of more than 10 years.
The EBRD finance comes under the EU/EBRD Municipal Finance Framework which has been designed to assist small municipalities with less than 100,000 inhabitants with loans for infrastructure investments. The loan to Abanka will be complemented by a €1.6 million grant from the European Union for technical assistance.
François Lecavalier, EBRD Director for Slovenia, said providing support and long term financing to small municipalities will contribute to an improvement in the quality of people’s lives by upgrading the municipal infrastructure. “We are proud to work with Abanka which has recognised municipal lending as an area with large growth potential”, he added.
Aleš Žajdela, President of the Management Board of Abanka, welcomed the signing of the contract with the EBRD, saying that it made a major contribution to improving the bank’s range of products and services, and to the continued growth of the bank and its business partners. “We are pleased that this loan will promote the development of local communities with which Abanka already has excellent relations. We will be working hard to extend this development to local small businesses as well”, he added.
The EU/EBRD Municipal Finance Facility is a joint initiative by the EBRD and the European Commission to stimulate commercial bank lending to small and medium-sized municipalities in the new EU countries. The €175 million facility aims to address the shortage of long term finance available to small cities and towns. The European Commission, through the PHARE Programme (http://europa.eu.int/comm/enlargement), is also providing financial and technical cooperation funds to help municipalities to prepare viable projects.
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