LOANS FOR PUBLIC SECTOR PROJECTS AT 1.1% INTEREST

The interest rate for investments of local and regional government units (LRGUs), institutions and agencies majority-owned by them in supported areas has been reduced to 1.1 percent, and to 1.2 percent for those in other areas. For direct lending to projects co-financed from EU funds, the interest rate has been reduced to 1.2 percent. In parallel, HBOR is developing a system of technical assistance to LRGUs to strengthen their capacities and enable them to be better prepared for the efficient absorption of the available EU funds.

In order to promote investment projects implemented by LRGUs, institutions and agencies in their majority ownership as well as to promote the absorption of the available EU funds, HBOR has lowered interest rates under the loan programmes: "Public Sector Investment" and "EU Projects".

Under the Public Sector Investments Programme, from now on, HBOR will directly lend to LRGUs, institutions and agencies majority-owned by them in supported areas at an annual interest rate of 1.1 percent, and those in other areas at an annual interest rate of 1.2 percent instead of the previous 1.75 and 2 percent, respectively. The interest rate of 1 percent and the approval of loans without charging any fees for loan application processing or changing loan terms and conditions for investment in the recovery from the impacts of the earthquake and/or economic development of Sisak-Moslavina County are still in effect. Under the EU Projects Programme, the interest rate for direct lending for projects implemented by LRGUs, institutions and agencies in their majority ownership has been reduced to 1.2 percent from the existing 1.7 percent, and to 1.9 percent for loans with repayments longer than 10 years.

Loans at reduced application processing fee and without commitment fee

Under both programmes for LRGUs, institutions and agencies in their ownership, the application processing fee has been reduced to 0.2 percent, and no commitment fee is charged. Depending on the purpose and breakdown of investment, loans under these programmes are approved for periods of up to 15 years, including the possibility of a grace period of up to 5 years, and maturities of up to 17 years, up to 4-year grace period included, can be approved if investment study indicates the need for a longer maturity. HBOR can finance up to 100 percent of the estimated investment value, including the corresponding VAT, and it is possible to issue a guarantee for the repayment of advance for loans to projects co-financed from EU funds. Besides regular programmes, HBOR also approves ESIF Loans for Energy Efficiency in Public Sector Buildings and ESIF Loans for Public Lighting at extremely favourable terms and conditions: interest rate as low as 0.1 percent and no usual fees charged when implementing loans.

In 18 months, HBOR supported public sector projects with almost HRK 1.5 billion

"It was only in the last 18 months that HBOR has supported more than 130 projects implemented by LRGUs under its loan programmes in the amount of almost HRK 1.5 billion. However, the data show that the economic, communal and social infrastructure is still significantly more developed and concentrated in the City of Zagreb and five counties. Therefore, HBOR has lowered interest rates for public sector investment to support further investments in infrastructure development, particularly those in less developed areas. In addition to more favourable loan terms and conditions, HBOR is also developing a new system of technical assistance for LRGUs in order to strengthen their capacities and better prepare projects for financing and implementation. Having in mind the possibilities under the adopted National Recovery and Resilience Plan and those planned under the new 2021-2027 Multiannual Financial Framework, the preparation of adequate projects becomes even more important in order to absorb the available funds as efficiently as possible," said Tamara Perko, President of the Management Board of HBOR. In cooperation with the EIB Group, HBOR has already started to implement two models of technical assistance for private and public sectors – ELENA and NCFF, that are intended exclusively for the projects of energy efficiency, renewable energy sources and natural capital protection, whereas a model for providing advisory services for public sector investment also in other areas is being developed.