Intensifying financial cooperation for infrastructure solutions in the Western Balkans
(Brussels 5 November) – European and International Financial Institutions have agreed to intensify their cooperation on key infrastructure investment in the Western Balkan countries and to jointly develop innovative financial instruments which pool public and private funds.
Commission announced in this context its intention to use up to €1 billion from the new Instrument for Pre-Accession Assistance to secure funding in this area for the 2014-2020 programming period. Combined with funds from the Financial Institutions, the EU funds aim to attract private capital that could finance at least €10 billion of investment in the Western Balkans, targeting key priorities of the beneficiary countries including infrastructure and economic development.
Countries in the Western Balkans will be able to access this funding mechanism, as well as sector budget support and competence-building through the transfer of knowledge, by improving their economic governance systems and making the best possible use of their national budgets. The Commission will cooperate with the IMF to support this effort.
The European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank, KfW Bankengruppe and the Council of Europe Development Bank (CEB) agreed with the European Commission to use the Western Balkans Investment Framework in order to ensure that EU and Member State resources are used for the financing of key priority investment in the beneficiary countries, through a single pipeline.
The Commissioner for Enlargement and European Neighbourhood Policy, Štefan Füle, commented: “The Western Balkan countries need stronger economic growth to create new jobs and catch up with the European Union. The needs for better infrastructure are enormous and can only realistically be funded by using the limited grant funding resources together with loans in the context of innovative financial instruments and ensuring that the governments' own budgets are subject to the best possible economic governance requirements.”
Background on the Western Balkans Investment Framework (WBIF)
Officially launched in December 2009, the WBIF is a joint initiative of the Commission together with the CEB, the EBRD and the EIB, endorsed by the European Council. Further partners are the World Bank as well as bilateral development finance institutions such as the KfW and the Development Bank of Austria. Bilateral donors include Member States as well as Canada and Norway.
After four and a half years in operation the WBIF has provided 169 grants of a total amount of € 0.297 billion. The total estimated investment is of € 13.3 billion and the total estimated loans of a total amount of € 7.0 billion. The signed loans are € 2.7 billion.The WBIF is an innovative financing initiative which pools grant resources in order to leverage loans for the financing of priority infrastructure in the Western Balkans. Investment projects support any sector that contributes to the economic, social and environmental development of the Western Balkans. Eligible sectors include infrastructure development within the environment, energy, transport and social sectors. Priority projects are defined and proposed by the beneficiary countries.
In 2011, the parties to the WBIF decided to engage in supporting the private sector development, and in particular the SME access to finance. Within this context, the 5th WBIF Steering Committee decided in December 2011 to set up the Western Balkans Enterprise Development and Innovation Facility (WB EDIF). The concept of WB EDIF has been developed by EIF with the EIB and EBRD as co-lead international financial institutions and in cooperation with the Western Balkan beneficiaries. It is a joint initiative which will be a financing platform to help to develop the ecosystem for venture capital and facilitate reforms in the regulatory frameworks for innovative and high-growth SMEs in the region. It has been designed to evolve as necessary, including attracting additional financial allocations and activities.
Further development of the WBIF
The Commission is currently examining the potential further development of the WBIF in the light of the changes to the programming and delivery of EC assistance under IPA II and the on-going need for substantial socio-economic investment in the Western Balkans.
Following the presentation of the Discussion Paper on the Evolution of the WBIF and the Possibilities for Using Innovative Financing Instruments at the WBIF Steering Committee meeting in June 2013 in Athens, the stakeholders (The Commission, IFIs, bilateral donors and beneficiary countries) launched a Task Force to review the various recommendations. This Task Force started working in September 2013 and will present an interim report to the WBIF Steering Committee on 4 December and a final report in June 2014.