The European Bank for Reconstruction and Development (EBRD) is providing a €20mn credit line to Zagrebacka banka (Zaba) that will enable it to on-lend long-term funds to small and middle-sized Croatian municipalities needing to improve district heating, urban transport, solid waste, sewerage systems and the quality of drinking water.
The loan to Zaba is the first under a €65mn framework approved by the EBRD to stimulate municipal finance in Croatia by assisting local banks expand the range of small local government borrowers to whom they can lend and extending the maturities of such loans.
Zaba, the largest Croatian banking group, is controlled by UniCredito Italiano.
In conjunction with the EBRD programme, the European Union in the framework of the Cards Regional Programme (€1mn) and the government of the Netherlands (€ ;2.5mn) are providing grants to fund technical assistance programmes both for local banks and municipal borrowers.
These donor funds will help local banks improve their risk assessment and lending practices. For municipalities, this assistance could take the form of funding financial management programmes, preparation of investment projects and feasibility studies.
What the EBRD is targeting through this project are priority infrastructure investments that will raise the standard of municipal services, improve the environment and help promote local economic development, says Andrew Krapotkin, the bank’s resident representative in Croatia.
The role of Zaba, and other partner banks participating in the programme in future, will be to identify, screen and finance infrastructure projects proposed by their municipal clients, Krapotkin added at a signing ceremony in Zagreb.