EU program offers below-market rates. Public and private sectors can tap €4 billion in concessional financing

EU program offers
below-market rates
Public and private sectors can tap

€4 billion in concessional financing

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The European Union launched an External Investment Plan (EIP), a scheme which provides concessional financing for projects in 70 countries, including Lebanon.

The EU did not specify a ceiling for each country. The total funds available to finance projects amount to €4 billion.

“Projects can be developed by the Government or private sector or financial institutions. They will enjoy financing with rates that are cheaper than the market rate,” said Michael Kӧhler, Director of the Neighborhood South at the EU.

The financing of each project will be divided into loans and grants. The EU will give priority to five sectors: Energy, transport, SMEs, digital, agriculture, and agro industries.

The EIP was launched in 2016, with Lebanon’s share not exceeding one percent of the contracted financing.

There are three new components in the EIP. The first is financing Public Private Partnerships (PPPs). The second is a guarantee facility for private investors who want to invest in PPPs. “This category will receive protection against credit risk,” Kӧhler said. The third is that the EU will provide technical assistance for developing new projects and monitoring their implementation.

Projects that are intended to benefit the community, particularly in areas with vulnerable Lebanese and Syrian refugees, will receive a larger grant component.

The grant component in the financing scheme will range between eight and 50 percent. The rate will depend on the type of project and the risk it entails.

The grace periods, repayment, and interest rates will all be subject to negotiations when the project proposal is discussed.

Kӧhler said: “By 2020, the EIP will generate ten to 13 times more investments, or at least €44 billion in grants.”
Reported by Yassmine Alieh
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Date Posted: Feb 07, 2018