The European Investment Bank’s €200 mln funding for Cyprus this year is not affected by the crisis triggered when Russia invaded Ukraine, EIB Vice President Lilyana Pavlova said Friday.
She said the bank expected to sign funding contracts estimated at €200 mln in 2022.
“I don’t think the current situation will affect (the funding operations); on the contrary, we are ready to provide all necessary support needed in Cyprus in the critical sectors of the economy,” Pavlova old a news conference with Finance Minister Constantinos Petrides.
“In the existing new crisis, and with respect to the increasing inflation and the new challenges we are all facing, we stand ready to support the people and the government of Ukraine to whom we want to express our full support and solidarity but also to neighbouring countries and other countries impacted from the consequences,” Pavlova said.
Cyprus and the EIB are planning to sign loan contracts worth €350 mln, namely €100 mln in loan agreements for Cypriot small and medium-sized enterprises (SMEs) midcaps through the Cyprus Entrepreneurship Fund II, urban infrastructure by Cypriot Municipalities of €150 mln and private investments of €100 million.
“As the developments are taking shape, we don’t believe it’s appropriate to change our development plan,” Petrides said.
He said Nicosia should expedite investments and not delay green growth to end the reliance on fossil fuels.
There are discussions for future projects such as the National Museum, support to the State Laboratory for innovation and research, and investments in the context of green transition such as photovoltaics along highways.
In 2021 amid the COVID-19 pandemic, the EIB provided funding to Cyprus, reaching €303 mln.
“But now the focus of discussions is renewable; there is huge potential, we are ready to provide financing and also our technical and advisory support, to prepare strong and sustainable projects,” the EIB Vice President said.
Pavlova said the EIB awaits the final decision at the European level to include natural gas and nuclear energy in the European taxonomy as transitional fuels.
“At the end of this year, we are obliged to make a review of our energy lending policy, which was adopted in 2019…but for the moment, policy remains as it is.”
Expanding Cyprus’ National Road Network, road safety, and financing the new Archaeological Museum and new State Lab are priorities EIB is planning to discuss.
A few months ago, a new loan agreement for €112 mln financing new motorways and the speed cameras system.
Last year, the EIB backed €303 mln of COVID economic resilience, road safety and fintech investment in Cyprus, a 24% increase from 2020.
It included the largest ever European Investment Fund engagement in Cyprus to enhance financing for Cypriot companies and overcome business challenges related to the COVID-19 pandemic.
It represented the fourth-largest support for transformational projects in 40 years of EIB Group engagement in the country.
Cyprus remains the largest beneficiary of EIB support, per capita, of any country in Europe with outstanding EIB exposure at €2.7 bln, or 13% of national GDP.
“The EIB Group is committed to supporting priority investment in Cyprus in close cooperation with Cypriot partners.,” said Pavlova.
Last year was a record for European Investment Fund backing for targeted business financing, enabled by Cyprus being the first country to join the EIB Group’s pandemic economic response initiative, the European Guarantee Fund.
New investment by Cypriot companies will benefit from €70 mln of new European Investment Fund financing to be managed by Hellenic Bank and Eurobank Cyprus.
And 2021 also represented the largest ever EIB support for transport investment in Cyprus.
New financing agreed last year would speed up the roll-out of road safety cameras at accident blackspots across the country and enable road improvements in Nicosia, Limassol, Paphos and Vasilikos.
Last year the EIB agreed to support research and development and business expansion investment by Hellas Direct through the first EIB venture debt financing for a Cypriot company.
The new fintech investment will expand technology-led insurance services across the region and adapt financial services to a post-Covid world.
The EIB expects to confirm new private financing initiatives with Cypriot banking partners under the Cyprus Entrepreneurship Fund risk-sharing initiative in the coming months.
It is also finalising backing for urban investment and renewable energy generation projects.
The bank has provided more than €5 bln for private and public investment in Cyprus since the start of operations in the country in 1981.
EIB is the long-term lending institution of the European Union owned by its Member States.