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NewsEIB is considering financing new shares on the railway network

EIB is considering financing new shares on the railway network

When all the planned sections are completed, the number of passengers is expected to increase to 1.4 million per year, and freight transport to 1.5 million tons, said Bragonzi.

EIB Global is considering financing new shares on the Montenegrin railway network, which would be useful to the wider economy, facilitate trade and regional integration and contribute to sustainable development, announced the head of the European Investment Bank’s regional office for the Western Balkans, Alessandro Bragonzi.

“When all the planned sections are completed, the number of passengers is expected to increase to 1.4 million per year, and freight transport to 1.5 million tons”, said Bragonzi in an interview with the Mina-business agency.

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He reminded that the EIB had previously provided funds for the reconstruction of the railway and that the works had contributed to significant improvements, primarily in traffic safety and the quality of service in goods and passenger transport.

“The project directly benefits the 1.2 million passengers who use the line annually and, indirectly, the wider economy by facilitating trade, regional integration and sustainable development,” said Bragonzi.

He said that the EIB is ready to build new partnerships in Montenegro in order to support the private sector and the development of strategic infrastructure, and help the country to develop in accordance with European and climate aspirations. The EIB, as a bank of the European Union (EU), has been supporting the development of basic infrastructure and the private sector of the Western Balkans for 45 years.

“We are one of the key financiers of the economic and investment plan of the European Commission (EC) which foresees nine billion Eeurs for key projects that support the green and digital transition, regional integration, connectivity and compliance with the EU”, said Bragonzi.

He reminded that the EIB in Montenegro has invested in projects in various sectors since 2006, the value of which exceeds one billion euros. The new branch, EIB Global, continued this tradition at the beginning of this year by signing a loan of 50 million euros with the Investment and Development Fund (IRF).

“These funds are part of a dedicated credit line for decarbonization in small businesses in the country, which enables the introduction of energy efficiency practices.” In addition to that loan, we provided a grant of 400,000 euros to the IRF, as help to strengthen the capacity to provide advisory financial services to small and medium-sized enterprises in Montenegro”, Bragonzi announced.

He added that this year EIB Global signed a grant for an additional 2.9 million in aid to the Government in order to accelerate the modernization of the national education system through the improvement, construction and reconstruction of school infrastructure. As Bragonzi explained, the EIB grant will supplement the existing loan of 18 million euros for the primary education sector, which includes technical and advisory support for project preparation and public procurement procedures, as well as for the development of national standards for monitoring and evaluating similar projects.

He stated that the loan of 50 million euros to the IRF is intended to finance projects related to climate activities for small and medium-sized enterprises.

“It is part of the EIB Climate Plan, which reflects our compliance with the Paris Agreement, COP 21, by which we have committed to increase the financing of environmental sustainability and climate projects, as well as to provide more technical assistance to our clients”, said Bragonzi.

He said that the IRF has so far helped them to approve more than 520 million euros for the economy of Montenegro.

“Those funds helped us support more than 1.2 thousand micro, small, medium and mid-cap companies, as well as public companies and local municipalities for infrastructure and green projects”, Bragonzi announced.

He highlighted support for the most vulnerable businesses, which usually face difficulties in accessing financing, such as micro-enterprises and start-up companies.

“Together with IRF, our reliable partner in Montenegro, we encouraged the growth and transformation of the private sector, and helped preserve jobs and business during the crisis. In the coming period, we want to expand our investments to female entrepreneurs and encourage the employment of vulnerable social groups who are struggling to get and keep a job”, said Bragonzi.

He stated that the EIB, during the corona crisis, adopted a double approach, which on the one hand implies an immediate struggle with the consequences of the pandemic, and on the other a long-term orientation towards climate change, innovation/digitalization, small and medium-sized enterprises and sustainability, which are at the center of their investment.

“We wanted to consolidate the EIB as a leader in development financing and to integrate these goals even more firmly into our organizational structure.” Those ambitions are at the core of our new branch EIB Global, dedicated to operations outside the EU”, explained Bragonzi.

According to him, EIB Global was born from the belief that the EIB’s contribution depends on a real understanding of the local context and close ties with other EU institutions and development partners, within the so-called Team Europe approach.

“The new branch represents a shift in our operating model, and especially in strengthening the local presence thanks to teams of experts.” By transforming our local offices into regional hubs, we want to accelerate the preparation of projects and mobilize more funds for renewable energy and vital infrastructure”, said Bragonzi.

He said that within that new branch they have already increased support in the Western Balkans for the preparation of projects in the field of sustainable mobility, renewable energy, environmental protection and education. Additional support also comes in the form of technical and investment grants that enable the successful preparation and implementation of such projects.

Bragonzi also believes that the energy crisis and the war in Ukraine are a strong reminder of the unsustainability of the existing energy system.

“We have a chance to turn this into a historic turning point towards a cleaner, more affordable and safer energy system.” The potential of wind and solar energy remains largely unused in the Western Balkans. “Regarding the framework of guidelines and the National Energy and Climate Plan, progress has been made, although there is room for improvement”, said Bragonzi.

He reminded that hydropower has a dominant role in renewable energy action plans, while wind and solar energy are currently in a subordinate position. In addition, the existing electrical systems in the region do not have the flexibility and basic load capacity that would support a significantly increased share of renewable sources.

“Removing unnecessary administrative burden and taxation could encourage more investments, especially self-consumers.” A single point of purchase can thus improve the coordination of the various institutions involved. Creating a more flexible electricity system and creating a liquid and competitive balanced market that will support the integration of renewable energies will also be essential”, Bragonzi said.

He believes that international financial institutions, in order to face these challenges and bridge the investment gap, should play a major role in increasing the share of renewable energy through financing under favorable conditions.

“The EIB Group has already demonstrated its climate support in our Climate Action Plan, earmarking more than 50 percent of annual financing for green investments by 2025.” Accordingly, EIB Global plans to increase financing of energy independence, renewable energy, environmental protection and climate adaptation in the Western Balkans in close cooperation with the EC and partners in the region”, said Bragonzi.

He also announced that a survey by the EIB, the European Bank for Reconstruction and Development (EBRD) and the World Bank (WB) showed that companies in the Western Balkans went through the coronavirus pandemic better than originally expected.

“They lost 29 percent of their turnover and nine percent of their workforce, but an unprecedented policy of support helped prevent a large number of businesses from going bankrupt, while only three percent of firms in the region declared insolvency or closed permanently”, Bragonzi said.

He added that companies that were better integrated into global value chains, innovative and with better management practices, could more easily face the impacts of the pandemic. The support of international financial institutions was also, according to him, important for providing emergency liquidity, which helped companies continue their work.

“The war in Ukraine has created new challenges for companies in the region, putting their resilience to the test for the second time. In the midst of this crisis, the adoption of innovations, digitization and decarbonization are becoming key factors of competitiveness”, stated Bragonzi and added that there is significant room for improvement in these three sectors throughout the Western Balkans.

The EIB report shows that Western Balkan economies generally invest more in innovation than comparative economies, although the process is driven by the adaptation of new technologies developed elsewhere.

“It also shows how the EU has worked to facilitate trade and encourage innovation.” Bearing this in mind, the Western Balkans should build strong ties with the EU, strengthen innovation and development, as well as avoid potential risks arising from deglobalization and disruption of trade and supply chains”, said Bragonzi.

He stated that digitization is an essential factor in stimulating innovation, and that the EIB report showed that the response to the corona crisis had a positive impact on improving the digital activities of companies. In Central and Eastern Europe, four out of five businesses, he said, have adapted production processes in response to the pandemic by starting or increasing online activity, delivering goods or working remotely.

“Large businesses have embraced digitization to a greater extent than smaller ones, with a 26 percent increase in online deliveries of goods and services. The report concludes that investments in digital infrastructure and improvements in management practices and worker skills are key elements in innovation-based development. It can also help to overcome contradictions in the development of the region as a whole, as well as to improve the resilience and adaptability of companies to shocks”, Bragonzi said.

He believes that, in addition to innovation, decarbonization is one of the priorities for the company’s progress. According to the survey, companies in the Western Balkans are lagging behind in environmental management practices, especially in setting targets for energy use and emissions. In the past three years, only 21 percent of companies have invested in energy efficiency. Some of the obstacles for green investments mentioned by companies are access to financing, especially for innovative and start-up companies.

“Those constraints may further worsen due to the crisis and monetary policy’s response to inflationary pressures”, Bragonzi said.

According to the EIB report on bank activities for Central, Eastern and Southeastern Europe from June, banks signal a potential decrease in the amount of loans and a possible decrease in the quality of lending.

“Those trends can make investment plans of companies difficult, and these are key factors in their growth and competitiveness.” Targeted policy measures, together with increasing their capacity and access to finance, are a real step forward in solving global challenges. Therefore, in Montenegro, the policy focus should be on creating an environment suitable for green investments for companies and the introduction of ESG practices”, said Bragonzi.

He added that companies and the public sector need enormous financial support in order to become greener, more digitized and more innovative. Also, the role of the EIB, through EIB Global, is to provide innovative instruments that will help the development of the capital market and support the private sector through increased, affordable access to finance.

“This is the case with the European Fund for Sustainable Development Plus (EFSD+), which is a financial framework for countries outside the EU. It includes guarantees on favorable and competitive terms to enable private investors to finance projects with assumed risks during times of increased market uncertainty. Innovative instruments also include EIB dedicated loans for climate activities and socially inclusive employment practices in small and medium-sized enterprises”, said Bragonzi, Dan writes.

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