The European Investment Bank Group, comprising the European Investment Bank (EIB) and its subsidiary, the European Investment Fund (EIF), provided close to EUR 1.9bn of new loans, guarantees and equity investment in Romania in 2017.
More than EUR 1.3bn in loans came from the EIB and EUR 551m from the EIF in the form of guarantees and equity investments in small businesses to sustain their growth.
The EIB Group’s support for Romania therefore represents some 1.04% of the country’s GDP, placing Romania fifth among EU Member States in this respect, and above the EU average of 0.46%. The group concluded four operations under the European Fund for Strategic Investments (EFSI), which is part of the Investment Plan for Europe.
In 2017, the EIB celebrated the 25th anniversary of its first lending operation in Romania. Over this period, the EU bank supported 126 projects in Romania, and its subsidiary, the EIF, supported 56 operations. The total cumulative volume of EIB loans exceeds EUR 13bn since the start of the Bank’s activities in Romania in 1992.
“EIB Group support in Romania has strongly increased over recent years. Our activities, which in 2017 reached their highest levels since 2009, are well balanced and serve both public sector investments and private corporate customers. In order to reduce the investment gap in Romania we are successfully deploying innovative financing under the Investment Plan for Europe. We will maintain our support for growth and employment in Romania and continue to combine EIB lending with EU grants, addressing the needs of the Romanian economy and its citizens in the best possible way,” said the EIB Vice-President, Andrew McDowell.
“As Minister of Finance and EIB Governor for Romania, I would like Romania to continue to benefit from the diversity of financing instruments and modalities the Bank makes available to the Member States, with emphasis on those which can assist in the absorption of the non-reimbursable European funds. We are following with interest the developments in EU consultation on the role of the EIB in the next multiannual financial framework (post-2020 MFF), aiming to ensure a balanced EU budget architecture with different areas and instruments for the implementation of EU targets beyond 2020, both within and outside the EU. We are relying on our strong partnership in preparing to take over the Presidency of the EU Council next year to ensure effective inter-institutional dialogue and good communication with all those interested in setting up the post-2020 CFM architecture,” said Minister of Public Finance of Romania Eugen Orlando Teodorovici.
Financing under the Investment Plan for Europe
Four lending operations were concluded under the European Fund for Strategic Investments (EFSI), which is part of the Investment Plan for Europe, or “Juncker Plan”, and which enables the EIB to finance projects that do not easily attract funding due to their higher risk profile. More specifically, the EIB signed the following loan agreements:
- EUR 15m for the private healthcare provider Regina Maria, supporting the upgrade and expansion of its network of facilities outside Bucharest. The project primarily targets outpatient care, as Romania taps private sector capacity and finance to respond to the evolving demographic and epidemiological needs in the country.
- EUR 7.5m for GreenFiber International SA to strengthen its waste collection capacity and processes for recycling PET and electronic equipment, thus increasing the amount of waste collected and processed by over 50 000 tonnes per year. This project, classified as 100% climate action investment, will create 280 full-time jobs and help Romania to achieve national recycling targets and the transition towards a circular economy.
- EUR 100m for Transgaz to provide EFSI-backed financing for the construction of a new European gas transmission corridor, increasing the security and diversity of European gas supply routes and sources.
- EUR 50m for UniCredit Bank, the first EFSI-backed financing for a Romanian commercial bank. UniCredit Bank is using the loan to finance innovative projects promoted by SMEs, mid-caps, start-ups and companies creating employment, and in particular jobs for young people.
Co-financing of priority infrastructure with EU funds
In 2017, the EIB provided a EUR 1bn loan to Romania to co-finance priority transport infrastructure projects with European Structural and Investment Funds. These projects totalled EUR 6.8bn and will be implemented across the country, helping to accelerate the absorption of EU funds by Romania during the 2014-2020 EU programming period.
The EIB granted EUR 21m to the Municipality of Oradea to finance improvements to its urban infrastructure. EIB funds will also support investments targeting climate action objectives, such as energy efficiency, renewable energy and sustainable transport.
Fostering urban development
The EIB provided EUR 75m for the completion of the Glina wastewater treatment plant, one of the largest wastewater treatment facilities in Europe serving almost 2 million citizens of Bucharest. The Bank also provided a loan of EUR 22m to finance the second phase of the refurbishment programme covering multi-family housing in Bucharest’s Sector 6 municipality.
Support for SMEs and mid-caps
In 2017, the Bank concluded EUR 75m worth of intermediated lending with three EIB partner financing institutions, further improving the access of Romanian SMEs and municipalities to EIB financing.
In this context, the EIB granted the first local currency loan to a Romanian bank, ProCredit Bank S.A., amounting to approximately RON 90m. Dedicated mainly to the investments of SMEs and mid-caps, the transaction marks an important milestone for EIB Group support for the Romanian local banking sector. More than 250 SMEs and mid-caps are expected to be reached through this operation.
The EIF provided SME Initiative guarantees to eight banks, providing loan guarantees and lowering interest rates charged by banks. Over 4 000 SMEs and start-ups in need of finance are expected to benefit from these transactions within the next three years.
In total, the EIF committed EUR 551m in Romania in 2017 through 18 guarantees, two microfinance transactions and one equity operation aimed at raising EUR 1.1bn of financing. Out of this, two transactions benefited from EFSI guarantees. EIF operations supported 2 400 businesses in total and contributed to the creation of some 19 000 jobs in 2017.
Throughout its activity, the EIF has developed a strong relationship with the Romanian Managing Authorities administering EU funds. In 2017, the EIF reinforced its extensive collaboration with the Ministry of Regional Development and Public Administration by signing a EUR 59m agreement to foster the equity investments of SMEs. In addition, the EIF launched a new initiative with the Ministry of Agriculture and Rural Development by signing the first agricultural mandate agreement for EUR 94m from the European Agriculture Fund for Rural Development to support investments by local farmers in Romania.