An increase of €15 million to the €15.2 million credit line framework for financing private small and medium-sized enterprises (SMEs) in Bosnia and Herzegovina. The Italian Government co-invests alongside the EBRD.
The project aims to support the growth and development of private SMEs, consumer finance and the banking sector in Bosnia and Herzegovina. The majority of the loan, however, will be used to finance SMEs. Proceeds of sub-loans will be used to finance capital goods, trade finance requirements, permanent working capital and consumer goods.
The project is expected to stimulate the growth of the entrepreneurial private sector, including privatisation, and to strengthen the institutional capacity of local private banks.
The Increased SME Framework will be used to extend credit lines to Participating Banks ("PB"s), which will on-lend to qualifying SMEs to finance capital goods and permanent working capital.Up to 30% of the Increased SME Framework can be used to finance consumer loans, whereas the initial framework was purely for SMEs, not consumers. Another difference to the first Framework is that, the increased facility will try to reach PBs in the Republica Srpska. The first PB under the Increased SME Framework is Upi Banka, which has qualified for a second credit line.
€15 million increase of the EBRD portion of the first SME Framework which was approved by the Board of Directors on 10 March 1999. The SME Framework is funded by the Bank and the Italian Government. The Italian Ministry of Finance will maintain their original commitment of €5.4 million unchanged.
Participating banks (PBs) will follow the EBRD's Environmental Procedures for Local Banks in relation to all sub-loans financed by EBRD funds. In implementing these procedures, the banks will assess potential environmental issues associated with sub-projects, which are required to comply, at a minimum, with local/national health, safety, environmental and public consultation requirements.
Technical cooperation funding will be provided by the Italian Government to continue with the Project Implementation Unit to assist in the first three-year period of the Increased Framework as new PBs are funded and expansion into Republica Srpska is sought.
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