The European Investment Bank (EIB) is lending EUR 10 million to NORD/LB Latvija (former Pirma Banka) for financing of small- and medium-scale projects in Latvia. The long-term finance contract was signed in Riga today.
Within this global loan, NORD/LB Latvija will finance projects in industry, services and tourism as well as small- and medium-sized investments in the field of environmental protection, energy savings, infrastructure (including health and education) in Latvia. Final beneficiaries will be small- and medium-sized enterprises (SMEs) and private or public promoters of any size and ownership for energy, environmental protection or infrastructure projects.
The development of SMEs as well as compliance with Community norms (in particular as regards environment) are key elements for Latvia's successful integration into the EU. Thus, the global loan will enhance EIB's support in favour of the SME sector and have a catalytic effect on further direct investments in Latvia, including from foreign investors, notably in areas related to Latvia's key role as a transit country.
It will also help to improve international competitiveness and contribute to the development of term finance in Latvia, an important element for the further progress of the financial system in the country. EIB's global loan will allow NORD/LB Latvija to increase and diversify its long-term funding sources and, therefore, to step up its financing of projects requiring longer maturities. Furthermore, it will sustain competition among intermediaries in the country, resulting in better service for the final beneficiaries and lower financing costs.
A window under the global loan will be associated with a grant element of the European Commission under the latter's SME Finance Facility. In order to support a strong and competitive SME sector in the new Member States, the EIB has entered into partnership with the EU Commission to launch this new facility. Under this partnership the Commission is making available EUR 45 million in the form of grants in combination with EUR 450 million from the EIB in the form of credit lines to different banks in the region.
The EIB, as the European Union's long-term financing arm, has provided EUR 330 million for projects in Latvia since 1994. Projects supported relate to priorities in the fields of transport (roads, railways, ports, airport), energy infrastructure, telecommunications and environmental and municipal infrastructure, including a credit line to support small- and medium scale environmental and municipal projects, as well as global loans for the financing of small and medium-size enterprises and small infrastructure in the country.
Generally, in the 2004 EU entrants of Central Europe (Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary and Slovenia) as well as in Romania and Bulgaria, which are expected to join the EU in 2007, the EIB has lent nearly EUR 20 billion to projects since 1990. Therefore, EIB is the most important external source of finance for this region.