EU lending arm gets 26.7 billion euro backing for non-EU projects

THE European Union's (EU) lending arm the European Investment Bank and the European Commission struck a new 26.7 billion euro agreement on Tuesday (May 9), expected to drive up spending in Ukraine and other countries outside the bloc seen at risk from Russia.

The EU budgetary guarantee deal would cover the risk of EIB loans and enable the development bank to finance projects in support of EU policy in what it described as "higher risk" environments.

It has lent close to 6 billion euros (S$8.8 billion) in Ukraine since Russia's 2014 Crimea Annexation and said the new set-up would enable it to construct or rebuild railways, roads, schools, hospitals and water and sanitation plants.

The EIB said countries covered by the plan would be eligible for loans with longer payback periods, low interest rates and "grace periods" where payments can be paused if needed.

Around 2/3 of the money has been earmarked for the western Balkans and the "Southern and Eastern Neighbourhood" regions, which includes Ukraine but also a number of other countries now seen as at risk from Russia.

"The financing operations undertaken by the EIB thanks to the EU guarantee will respond to EU policies and specific policy priorities of EU cooperation with the partner countries," the EIB said.

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The move will also be the largest guarantee agreement of a plan launched last year called the European Fund for Sustainable Development Plus (EFSD+), designed to fund environmental projects and help reduce poverty in countries as far afield as Africa. REUTERS