€40 million to help small businesses recover faster and boost development of key economic sectors
The funds will strengthen the Kosovo Credit Guarantee Fund (KCGF) in terms of extending guarantees to local financing institutions so that lending to small business is boosted
The funds are part of the Team Europe financial programme for the region’s socioeconomic recovery from the COVID-19 pandemic
The European Investment Bank (EIB) will provide a €40 million loan to Kosovo to support access to finance for micro, small and medium-sized enterprises (SMEs) that have been impacted by the COVID-19 crisis. The project will provide funds, through the Kosovo Ministry of Finance, to KCGF to issue credit guarantees to local financing institutions and facilitate working capital and longer-term capital investments to small businesses. By providing the much needed financial resources underpinning KCGF, this operation will be crucial to spur recovery from the COVID-19 crisis, private sector development, employment and growth in Kosovo. The project is part of the Team Europe initiative and the €1.7 billion financial programme adopted by the EIB in 2020 for the socioeconomic recovery of the Western Balkans from the COVID-19 pandemic.
The EIB funds will enable access to immediate financing for small businesses under favourable terms and conditions. At the same time, they will support recovery and growth by targeting specific economic sectors such as production, agriculture, services, women and ICT entrepreneurship, thus boosting the competitiveness, growth and resilience of Kosovo’s economy.
EIB Vice-President responsible for the Western Balkans, Lilyana Pavlova said: “By joining the Team Europe initiative, the EIB intended to demonstrate its unwavering support for the region during the COVID-19 crisis. We know that the pandemic has hit smaller companies, which often encounter limited access to financing, the hardest. These funds signed today will help Kosovo’s economy not only to ‘get back on track’ by injecting liquidity into the market, but to evolve and develop in all major target sectors. They will contribute to the resilience of Kosovo’s economy, helping it to revive its supply and production capacities, retain jobs and reinforce its competitiveness and role in the regional and EU market.”
Hekuran Murati, Minister of Finance, Labour and Transfers of Kosovo, added: “It is a distinct pleasure for me that one of the first financing agreements I sign is to support the private sector. As a government that took office in the midst of the COVID-19 pandemic, our main focus is supporting the private sector to enable a resilient recovery. This guarantee facility with the Kosovo Credit Guarantee Fund will be key to help the economy to build back better both by facilitating access to finance for SMEs and helping them adopt best practices and environmental and social standards. As a Ministry we look forward to smooth implementation of this and other initiatives financed together with the EIB.”
Besnik Berisha, CEO of the Kosovo Credit Guarantee Fund, said: “We at KCGF are very enthusiastic to be present at this signing ceremony to witness this agreement between the EIB and the Government of Republic of Kosovo. It comes at the right time when the economy of Kosovo is going through a recovery period and such direct measures, aiming to boost private investment and hence revive economic activity, are needed most. The SME segment, which is the backbone of the economy in our country, as everywhere else, was hit most by the negative impact of the pandemic crisis. Besides suffering from a decrease in their turnover, many of them are still having difficulties adapting their internal processes and services to the new circumstances. With this programme, which will be implemented by KCGF, we will certainly not solve all the problems for private enterprises, but we will try to address in the most professional and appropriate manner one of the main concerns of this segment, which is to have easier access to financing. This contract provides for €40 million in additional capital for KCGF; however, due to the permanent nature of KCGF and the multiplying effect that credit guarantee schemes have, the impact on the real economy during the first two years will be as much as €120 million, whilst the same funds will continue to be used and hence support many more investments far beyond the validity period.
Riccardo Serri, Deputy Head of the EU Office in Kosovo stated: “Through various recovery packages and relief measures, the EU continues to provide support for small and medium size enterprises which are facing many unprecedented caused by the Covid-19 pandemic. This additional EUR 40M investment, will provide additional liquidity and structural support for private companies. This agreement today, shows a concrete example on how Team Europe partnerships can deliver on the post-pandemic recovery. We look forward that the present signature spurs more business activities, which in turn will generate employment and growth, bringing Kosovo back on a steady path of economic development.”
*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence.
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