EU/EBRD Small Municipalities Finance Facility - Extension



Project number:


Business sector:

Financial institutions

Notice type:


Environmental category:


Approval date:

26 Oct 2005



PSD disclosed:

21 Sep 2005

Project Description

The EU/EBRD Municipal Finance Facility will be an extension of the current regional framework facility for municipal lending. The project will provide loans and risk-sharing facilities to Partner Banks in the new EU Countries and the EU Accession Countries for lending to small municipalities and utility companies. The European Commission would provide grant support to the project.

The project’s objectives are to:

  • Meet the need for long-term funding for municipal infrastructure and energy efficiency investments;
  • Use local intermediaries to reach smaller municipal borrowers than EBRD can directly;
  • Share risk with the banks to encourage them to extend the maturities of municipal loans;
  • Build the institutional capacity of banks in municipal finance, in particular with respect to energy efficiency;
  • Improve the creditworthiness of small municipal borrowers through programmes to enhance creditworthiness;
  • Enhance the capacity of municipalities to structure and apply for financing for energy efficiency investments.


Transition Impact

The project is expected to generate transition benefits in the following areas:

  • market expansion: small municipalities will have access to long-term funding which will enable them to implement infrastructure investments, including energy efficiency investments;
  • skills: through the TC programme, the project is expected to increase the level of skills of both the Partner Banks and the small municipalities;
  • demonstration effect: it is anticipated that once the Partner Banks start lending and extending loan maturities to small municipalities, this will have a demonstration effect in promoting similar lending by other commercial banks outside the facility.
  • demonstration effect: benefits of rational energy usage and raised energy efficiency awareness both in the public and private sector.


The Client

Commercial banks as Partner Banks.

Municipalities, municipally owned companies and private companies providing municipal services will be the beneficiaries of financing for energy efficiency investments.

For general municipal infrastructure investments, excluding energy efficiency, small municipalities with fewer than 100,000 inhabitants will be the beneficiaries of the sub-loans.

EBRD Finance

EUR 90 million in the form of credit lines and/or risk sharing facilities.

Project Cost

EUR 90 million.

Environmental Impact

There are no environmental issues directly associated with the proposed facility. However, it would be instrumental for the selected municipalities to meet EU environmental standards and would assist the eligible countries in complying with EU standards as well as under international environmental programmes targeting protection of Baltic Sea, the Danube River and Black Sea.

An Environmental Checklist has been developed for environmental appraisal of sub-projects by Partner Banks. All the sub-projects to be financed will need to be designed to comply with the national and EU environmental standards.

Technical Cooperation

Technical Cooperation will be funded by EC Phare to:

Provide creditworthiness enhancement programmes for small municipalities;

Improve local banks’ lending capacity in municipal finance, in particular for energy efficiency investments;

Assist municipalities to identify potential for improvements of energy usage and to prepare energy efficiency projects for financing.


Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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