EIB to lend €50 million to IDF to support green recovery in Montenegro
Funds will be available under favourable conditions to help small and medium-sized enterprises (SMEs) address their liquidity issues, support jobs, increase competitiveness and improve energy efficiency practices.
The European Investment Bank (EIB), the bank of the European Union, will lend €50 million to the Investment and Development Fund of Montenegro (IDF) to support the faster recovery of the local economy from COVID-19 and help introduce energy-efficient practices among small businesses in the country. The EIB loan signed today during an online ceremony creates a new source of more affordable financing for Montenegrin companies operating in infrastructure, industry, transport, innovation, agriculture and tourism, some of the hardest-hit sectors.
Funds will be available under favourable conditions to help small and medium-sized enterprises (SMEs) address their liquidity issues, support jobs, increase competitiveness and improve energy efficiency practices. The EIB loan is the latest of Team Europe's support measures to accelerate the COVID-19 recovery of regional economies and effective climate action. It delivers much-needed climate and environmental sustainability financing for the Western Balkans to enable a faster transition to a sustainable, green and circular economy.
EIB Vice-President Lilyana Pavlova, who is responsible for operations in Montenegro, said: "This operation addresses the two most important global economic and social issues of our time – COVID-19 recovery and climate action. As the EU climate bank, the EIB intends to ensure that Montenegro and the Western Balkans continue to benefit from access to affordable financing and technical assistance for climate and green investments. Climate action brings unparalleled opportunities for social and economic development to the region and the EIB will work alongside partners like the IDF to ensure green investments fuel economic and social development, regional integration, cohesion, and the EU accession process. We are actively looking across the region for partners to improve energy efficiency, reduce carbon footprint and transform regional economies into more competitive and sustainable economies both in the region and in Europe."
Irena Radović, Executive Director of the Investment and Development Fund of Montenegro, said: "The economic crisis brought on by the COVID-19 pandemic continues to be a source of uncertainty, but also presents an opportunity for Montenegro to ensure a resilient, inclusive and green post-pandemic recovery. The significance of our long-standing partnership with the EIB and today's event cannot be overestimated. As Montenegro's national financial development institution, we are proud and passionate about taking the lead in the green transition and economic transformation in close cooperation with the EIB and being the first signatory of such an operation for climate action in the Western Balkans. This operation will give an additional impetus to increasing prospects for a faster green and inclusive recovery and help local small, medium and mid-cap enterprises improve their social impact in gender equality and youth employment, and encourage companies to employ people from vulnerable social groups. As such, greening Montenegro's economy is becoming a decisive factor in our competitiveness and the ability to attract international finance and investments."
Milojko Spajić, Minister of Finance and Social Welfare in the Government of Montenegro, said: "We are doing all we can in these challenging times to improve the living standards of our people, including by strengthening micro, small and medium enterprises. They make up 98% of all existing companies and contribute greatly to steady economic development, creating the right conditions for Montenegro to become a new EU Member State. Their development affects GDP growth and the creation of new jobs. At the same time, the greening of our economy is what could really increase Montenegro's competiveness, as a small country with great opportunities. This kind of financing will help micro, small and medium enterprises not only make their businesses more sustainable after the COVID-19 crisis, but also expand them further. I would like to express my gratitude to our partner – the EIB – which, by acknowledging the importance of the transition to a green economy, is helping us to provide better and healthier living conditions for young Montenegrins."
Oana Cristina Popa, EU Ambassador to Montenegro, said: "Small and medium-sized enterprises are the backbone of the Montenegrin economy, generating the majority of employment and value added. The European Union has consistently supported the SME sector, especially through the Instrument for Pre-Accession Assistance (IPA), helping them to tackle challenges and increase the overall competitiveness of the economy. We will persist in our efforts to support small and medium businesses during the IPA III period (2021-2027). Combined with the EU assistance for SMEs provided under the instrument, the EIB loan agreement will enable the recovery of the Montenegrin economy as well as contribute to its green transition."
This is the second loan signed with the IDF since the start of the pandemic, following a €50 million investment signed in September 2020 to support the COVID-19 recovery of over 150 Montenegrin small and medium enterprises. Including the loan signed today, the EIB and the IDF have signed six operations to date, unlocking €470 million of investments for the Montenegrin economy.
The latest operation will also help to create new youth employment opportunities through special loan conditions provided under the European Youth Employment and Training for the Western Balkans (EYET) initiative. Agence Française de Développement is also co-financing the IDF and providing technical assistance to help the fund develop a strategy, guidelines and resources for climate action investments.