The EBRD is extending a €35 million loan to the Bulgarian Fund for Local Authorities and Governments JSC (FLAG) to expand the fund’s lending to Bulgarian municipalities for co-financing of EU post accession grants. The transaction is an extension of an existing €35 million credit line of which 60 per cent will be syndicated while the EBRD will retain an additional €14 million for its own account.
FLAG plays a key role in ensuring absorption of EU cohesion funding. Since its establishment in 2007, the fund has primarily financed small- and medium-sized municipalities in Bulgaria. To support these municipalities, FLAG is providing both short- and long-term sub-loans for the preparation, implementation and co-financing of EU grant funded projects.
As the current EU operating programme framework (2008-2013) draws to a close, FLAG has experienced a strong increase in demand for funding. To enable the fund to sustain its achievements to date and to continue supporting the absorption of EU grants, the EBRD has developed this €35 million extension of the Bank’s original loan provided in 2008.
This is a recognition of the important achievements made with the support of FLAG over the past few years. Noteworthy examples include co-financing of road rehabilitation works, energy efficiency measures in public buildings and waste water infrastructure investments. As of 30 June 2013, FLAG has provided 482 loans to 185 municipalities with a total value of BGN 466.4 million (€238.5 million), supporting investments projects worth more than BGN 1.5 billion (€766.9 million). For the next period up to 2015 a move towards bigger projects with increased for longer term financing is expected.
Daniel Berg, EBRD Director, Bulgaria, said: “FLAG has done important work in supporting Bulgaria absorbing EU funds and putting the inflows to best possible use. We are impressed by the progress that has been made thanks to a strict and transparent regime which follows international best practice.”
To date, the EBRD has financed over 200 projects in Bulgaria with a total volume of more than €8.5 billion. The Bank is focused on strengthening sustainable growth through a focus on enhancing local business competitiveness and investing in the modernisation of the country’s real economy and infrastructure.