The relevant documents have been signed for Serbia and Montenegro by the Minister of International Economic Relations of Serbia and Montenegro, as well as other respective financial authorities for both the European Investment Bank (EIB) and the countries.
The financing is divided into two parts. The first serving small- and medium-sized investments by private companies and municipalities in both states. This part is expected to throw up a series of investments for various industries, including that of food and beverage. The second part will support various infrastructure projects for the region.
The EIB said that €45 million has been earmarked for a global loan with the Central Bank for Small and Medium-sized investments by private sector companies and Municipalities in Serbia and Montenegro. It also includes a 'window' for support to micro-enterprises, a segment that, according to the EIB, has so far had only limited access to cheap long term funds for investments.
The Central Bank will channel the EIB funds through a number of banks to be agreed with the EIB.
In support of this global loan the European Agency for Reconstruction has said it will provide Technical Assistance made available to the Central Bank's dedicated Fund Management Unit, as well as to the other partner banks of this facility. The Technical Assistance, which will be provided by internationally experienced staff, aims to support and train financial staff in SME lending.
This is a follow up of EIB's first global loan provided to the Central Bank in 2002 of €20 million, which has been was used over the course of two years to support 24 projects. Through this first global loan some 600 new jobs have been created in sectors such as construction, agro- and food industry, packaging, pharmaceuticals, local transport, manufacturing of cleaning and sanitary products and textile industry.
The global loan aims at serving private sector and small public infrastructure financing needs. It also contributes to the availability of long-term lending facilities domestically through local banking partners.
A further €25 million has been earmarked for water supply and sanitation services in the greater area of the two major Serbian cities Novi Sad and Niš. Upon its completion in 2007, the project will serve some 600 000 people. This scheme is being carried out in co-operation with the EBRD and KfW, in an effort to maximize synergies.
EIB says that through the funding it will increasingly address the needs of the municipal sector in Serbia, as it is already doing in other countries of Central and Eastern Europe. Operational contacts are well established with the Municipal Infrastructure Agency and a possible EIB Facility dedicated to medium and small Serbian Municipalities is now under preparation and could be finalised in the near future.