The European Investment Bank (EIB), the Ministry of Finance and the Ministry of Environment of the Republic of Lithuania signed an agreement on 11 June 2009 to strengthen co-operation in financing sustainable urban development.

The agreement is under the joint European Commission and EIB initiative, supported by the Council of Europe Development Bank, Joint European Support for Sustainable Investment in City Areas (JESSICA).  The agreement foresees the establishment of a special JESSICA Holding Fund.

The initial capital of the fund will amount to EUR 227 million. This consists of an allocation from the European Regional Development Fund (ERDF) and a budgetary contribution from Lithuania, financed through an EIB loan. This is the largest JESSICA Holding Fund set up so far and the first one focused on energy efficiency for urban areas investments.

The fund will provide financing for energy efficiency projects in the housing sector through the Lithuanian banks. Promoters like owners of multi-apartment buildings, will receive soft loans with promotional interest rates and long maturities. The fund will therefore contribute to reduce energy consumption and achieve other associated goals, such as reduction of emissions and improvement of quality of life.

JESSICA is focused on the promotion of sustainable investment and growth in urban areas. This initiative enables the EU Member States and their regions to use some of their EU Structural Fund allocations, to make repayable investments in projects forming part of an integrated plan for sustainable urban development. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via Urban Development Funds. This will take place in Lithuania via the funds established in the participating banks.

JESSICA is a response to the request from several Member States and the European Parliament to give special attention to the need for renewal and/or regeneration of certain urban areas and is based on a perceived market failure in the urban sector or, more specifically, on the lack of investment funds to finance integrated urban renewal and regeneration projects in pursuit of more sustainable urban communities.

Note for the editor:

In the prevailing economic context, the European Investment Bank Group, the banking group promoting European objectives, stepped up its activities in 2008 by additional 15bn EUR lending in 2009 and 2010 each.

The European Investment Bank as an European Institution prompts economic recovery in the European Union as a whole and in Lithuania. The Bank’s action through increased lending is targeted at the real economy through three main areas: support for small and medium sized entities (SMEs), investments to protect the climate (including research, development and production of "clean" cars); and investment in the less well off ‘convergence' regions of the EU.

Total EIB lending rose by 21 percent in 2008 to EUR 57bn, compared to EUR 48bn in 2007. Loan signatures rose sharply towards the end of the year, reflecting the EIB's swift response to help underpin economic recovery at the request of the European Union's Member States.
Since the accession of Lithuania into the EU in 2004, the European Investment Bank provided loans in the country totaling to EUR 1.28 billion.