EUR 13bn for economic and financial support – the EIB Group celebrates 25 years of operations in Romania
The European Investment Bank (EIB) has approved more than EUR 13bn worth of financing and advisory services for Romania since it started its operations in the country 25 years ago. EIB Vice-President Andrew McDowell and Romania’s Prime Minister Mihai Tudose today commemorated the 25th anniversary of the approval of the first ever EIB operation in Romania and the 10th anniversary of the opening of the EIB Group Office in Bucharest, and discussed future cooperation between the EIB Group and Romania.
The EIB Group has played an important role in the modernisation of the Romanian economy since 1992. Development of trans-European and national networks and devotion to climate action have been a predominant feature of the EU bank’s operations in the country. The first operations during the mid-1990s were targeted at modernising the national roads network, completing unfinished works on the Bucharest metro, regenerating the system of ageing and polluting power production plants, renewing TAROM’s fleet and reducing losses in the municipal district heating systems. All major sectors of the country’s economy have been supported, ranging from transport, communications, energy, health, education and rural development to environmental infrastructure and a lot of attention has been devoted to support for small and medium-sized companies via local financial institutions and to projects helping to develop an information society and a knowledge economy but also create much needed new employment opportunities.
The transport sector has dominated projects supported since 1992
The biggest share of EIB Group lending in Romania (42%, or EUR 5.4bn) has gone to the transport sector. It targeted the rehabilitation and modernisation of railway, road and motorway networks as well as sustainable urban transport, i.e. the Bucharest metro. The second biggest share went to long-term financing for SMEs and midcaps (21% or EUR 2bn), followed by energy projects (8% or EUR 1bn). These include the construction of the Fantanele Wind Farm (EUR 200m) and a gas power plant close to Ploiesti (EUR 200m). The EIB also approved EUR 480m for the improvement of energy efficiency in residential buildings in Bucharest. Finally, EUR 143m went to the rehabilitation of elementary and pre-university schools across the country.
Romania is the biggest recipient of EIB Group financing in the south-east of the EU, followed by Croatia and Bulgaria, with some EUR 5bn each.
New financing for SMEs under SME Initiative Romania
Today’s event was not only about celebrating past achievements, but also to sign new operations: the European Investment Fund (EIF), part of the European Investment Bank Group, signed three additional SME Initiative guarantee transactions with BRD-Groupe Société Générale, with ING Bank (Bucharest Branch) and Libra Internet Bank acting as partners. The agreements with the three banks aim to facilitate access to finance for Romanian SMEs by providing a 60% guarantee on each loan and by lowering the interest rates charged by banks. These transactions are expected to benefit around 300 SMEs and start-ups in need of finance.
In addition, the EIB signed a first loan denominated in RON (Romanian Leu) with ProCredit Bank S.A., amounting to approximately RON 90m (EUR 20m), dedicated mainly to investments for SMEs and midcaps, marking an important milestone for the EIB Group in supporting the Romanian economy through its local banking sector partners. More than 250 SMEs and midcaps are expected to be reached through this long-term RON denominated lending.
Environmental protection project under the Juncker Plan
At the same time the EIB provided a EUR 7.5m loan to GreenFiber International SA to finance a recycling and circular economy project. This operation is backed by the EFSI as well. The project will contribute to the creation of 280 full-time jobs and will increase the amount of waste collected and processed by over 50 000 tonnes per year.
EIB Vice-President Andrew McDowell commented: “We are celebrating the 25th anniversary of our first lending operation in Romania as well as the fact that we support projects that improve the living standards of the citizens of Romania. Similarly, as there have been 145 projects supported directly by the EIB in Romania and 73 operations accomplished by its subsidiary EIF in the country so far, the new transactions are designed to reduce disparities in regional development and to strengthen the economic competitiveness of Romanian businesses. The current projects are good examples of the fruitful partnership between the EIB and Romania: they provide long-term, affordable financing to small and medium-sized enterprises. SMEs are the backbone of the Romanian economy when it comes to generating jobs and economic growth. The use of the EU budget guarantee under EFSI for a project contributing to the climate action priority enables us to support investments that otherwise would not qualify for EIB lending.”
Prime Minister of Romania Mihai Tudose stated: “The Romanian Government and citizens treasure the fruitful collaboration demonstrated over the last 25 years between the EIB and our country, especially in the field of public investment support and financing. The new projects signed today represent a good example of EIB cooperation with the Romanian economy and they are expected to generate positive effects in terms of financing costs and the availability of liquidity for long-term funding to Romanian SMEs, fostering growth and employment with a view to improving the everyday life of citizens.”
European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “A circular economy responds to the main challenges of our time. Shifting from linear business models to circular ones will help our economy become more competitive and resilient, and relieve the pressure on our resources and the environment. It is very satisfying to see the Investment Plan for Europe enabling GreenFiber to expand its recycling scope. I encourage more Romanian businesses to take advantage of the financial and advisory support offered by the European Investment Bank and the Investment Plan.”
Green Group President Clement Hung commented: "The EIB funds will enable GreenFiber International SA, the leader in recycling in Romania and Europe’s largest PET recycler, to increase the company´s collection of recyclable materials and its polyester stable fibre output. I very much welcome that, thanks to the EIB’s support, GreenFiber International SA has the opportunity to contribute to Romania´s transition to a circular economy and to meet Romania’s national recycling targets.”
The EIF agreements with the three banks aim to facilitate access to finance for Romanian SMEs by providing a 60% guarantee on each loan and by lowering the interest rates charged by banks. These transactions are expected to benefit around 300 SMEs and start-ups in need of finance.
The EIF has thus made a commitment to deliver enhanced access to finance for SMEs in Romania by extending the number of banks in Romania supporting local companies to eight. These recent transactions will increase the coverage of potential beneficiaries to achieve the full deployment of the programme. The combination of European Structural and Investment funds, EU Horizon 2020 and EIB Group resources enables the EIF to provide risk-sharing and capital relief to financial intermediaries for the ultimate benefit of over 4 000 Romanian SMEs.