EIB Launches EU4Business Guarantee Facility to Boost SME Financing in Eastern Partnership Countries

EIB Launches EU4Business Guarantee Facility to Boost SME Financing in Eastern Partnership Countries

(IN BRIEF) The European Investment Bank (EIB) Group has introduced the EU4Business Guarantee Facility, in collaboration with the European Investment Fund, aimed at supporting small and medium-sized businesses (SMEs) in Eastern Partnership countries, including Armenia. This initiative provides partial portfolio guarantees to local banks and financial intermediaries, allowing them to offer SMEs favorable financing terms with reduced collateral requirements. Backed by an 80% guarantee on each loan, the facility is expected to unlock over €250 million in additional financing for SMEs, contributing to job creation and economic opportunities in the target countries. The European Union is providing €40 million in financial support for this initiative, which aligns with the EU’s efforts to promote economic resilience and sustainable development in the region. The EU4Business Guarantee Facility succeeds its previous phase, extending its geographical reach to five Eastern Partnership countries.

(PRESS RELEASE) LUXEMBOURG, 2-Dec-2023— /EuropaWire/ — The European Investment Bank (EIB) Group launched the EU4Business Guarantee Facility, in line with the Global Gateway strategy. The facility provides partial portfolio guarantees to local banks and other financial intermediaries in Armenia and other Eastern Partnership countries.

By providing an 80% guarantee on each loan, the facility will enable participating financial intermediaries in these countries to offer finance to local small and medium businesses (SMEs) on favourable terms, including reduced collateral requirements. Implemented jointly with the European Investment Fund, it is expected to unlock at least €250 million of additional financing for SMEs, ultimately sustaining jobs and new business opportunities in the target countries.

The European Union is providing €40 million of financial support for the facility under its EU4Business initiative covering EU-funded programmes devoted to SMEs in Eastern Partnership region.

The facility succeeds the previous EU4Business Guarantee Facility – Phase I, extending its geographical coverage to five Eastern Partnership countries. Building on the success of Phase I, which facilitated a €472 million debt finance portfolio with a focus on SMEs in Ukraine, this new phase demonstrates the EIB Group’s continued commitment to promoting economic resilience and development in the region.

The facility is instrumental for the Economic and Investment Plan for the Eastern Partnership, through which the European Union aims to support the partner countries’ socioeconomic recovery while pursuing the green and digital transitions.

The EIB Group presented the new EU4Business Guarantee Facility and ongoing Armenian Economic Resilience Programme to Armenian banks at an event hosted by the Central Bank of Armenia (CBA), a long-standing EIB partner. The EIB and the CBA recently signed the fourth financing agreement under the programme, amounting to €70 million. Thanks to this loan, financial intermediaries and SMEs can also receive technical assistance funded by the Eastern Partnership Technical Assistance Trust Fund and Green Financial Systems Programme. This operation builds on the success of three previous lines of credit totalling €150 million to facilitate access to finance for Armenian SMEs.

As highlighted by CBA Governor Martin Galstyan, “The EIB and the CBA initiated financial collaboration in 2014 that has proven to be highly successful. This partnership significantly boosted Armenia’s private sector by channelling funds through financial institutions to SMEs, creating more than 4 000 jobs. The new €70 million loan facility has set ambitious goals, aiming to support SME investments in green projects, women’s empowerment, business process automation and digitalisation. For this new phase, ten partner financial institutions have already been selected as intermediaries for the facility.

The CBA also welcomes the EIB Group’s initiative to launch the EU4Business Guarantee Facility in Armenia for the first time and encourages financial institutions to use this credit risk sharing opportunity to build a new portfolio of SME debt transactions.”

EIB Vice-President Teresa Czerwińska, responsible for operations in Armenia, remarked, “Support for SMEs is one of the EIB Group’s key priorities because, by funding them, we are boosting economic development, innovation and employment. With EU financial support, we are delighted to launch this new facility to enhance access to crucial financing so that SMEs can continue to develop new projects and generate growth.”

Ambassador Vassilis Maragos, Head of the EU Delegation to Armenia, explained, “Financial inclusion fuels economic growth and reduces poverty. That’s why the European Union and the EIB have created a guarantee facility — it opens doors for more Armenian SMEs to secure financing and growth. This facility will bring additional resources contributing to the implementation of the EU Economic and Investment Plan for Armenia. We’re happy to see the Armenian banking sector’s strong interest in this initiative. “

Background information

About the EIB and EIB Global

The EIB is the long-term financing institution of the European Union, owned by its Member States. It provides long-term finance for sound investments in pursuit of EU policy goals, supporting projects in four priority areas: infrastructure, innovation, climate and environment, and SMEs.

EIB Global is the EIB Group’s specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner of Global Gateway. We aim to support €100 billion of investment by the end of 2027 — around one-third of the overall target of this EU initiative. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society in close cooperation with other multilateral development banks. EIB Global brings the EIB Group closer to local people, companies and institutions through our offices around the world.

About the EIB in Armenia

The EIB has worked with Armenia since 2010. It operates in the country in line with the European Neighbourhood Policy, the Eastern Partnership and other EU bilateral agreements. In the last decade, the Bank has provided financing for a wide range of projects, from infrastructure and small businesses to water supply services and wastewater treatment. It also funds cross-border connections to build safer and more sustainable roads.

About the Central Bank of Armenia

The CBA is a legal entity empowered with public functions. Its primary objective is to ensure price and financial stability. The CBA develops, approves and implements a monetary policy programme for Armenia, regulates and supervises its financial system, and oversees its payment system. It is also responsible for the issuance and circulation of national currency, Armenia’s international reserves, etc.

https://www.cba.am

https://www.facebook.com/cba.arm/

https://am.linkedin.com/company/central-bank-of-armeni

Media Contact:

Begum Iman
b.iman@eib.org
+352 4379 – 85212

Press Office

press@eib.org
+352 4379 – 21000

SOURCE: European Investment Bank