Local governments will implement transport, healthcare or sports and recreation investments thanks to a new credit line, which Bank Gospodarstwa Krajowego is launching in cooperation with the European Investment Bank. Medium-sized cities, with a population up to 100 000 inhabitants, can benefit from loans drawn from an overall facility worth PLN 700 million.
EIB and BGK aim to provide equal opportunities for medium-sized cities in terms of access to favorable financing. Smaller centers cannot usually access direct lending from the EIB and the new line from the MUNICIPAL FACILITY & COVID 19 RESPONSE programme bridges this gap. The loan for cities will be available at Bank Gospodarstwa Krajowego starting from the second half of June.
The funds will help restore the economy after the coronavirus pandemic and finance projects included in municipal multi-annual investment plans, many of which pursue sustainable development goals. Poland, as one of the 193 Member States of the United Nations, has adopted the "2030 Agenda for Sustainable Development." According to the Europe Sustainable Development Report 2020, we are currently in 16th place in the European ranking that measures the level of implementation of the sustainable development goals.
The first such loan by BGK and EIB, in the form of a pilot, was already granted toOstrów Wielkopolski, the city of 70 000 inhabitants. In September 2020 this city obtained the financing of PLN 110 million, which supports almost half of the investments planned by Ostrów. Starting from the second half of June other cities may apply for financing that may cover up to 70 per cent of project costs. The repayment period will be up to 25 years.
“EIB loans are designed for the implementation of various urban development projects – from the revitalisation of districts at risk of socioeconomic marginalisation and post-industrial areas to the construction of affordable housing and expansion of communication systems. Financing for sustainable transport is also growing, including electric buses, trams and modern depots,” said Teresa Czerwińska, vice-president of the European Investment Bank. “The new agreement concluded with our long-term partner, BGK, will enable Polish medium-sized cities to continue future-oriented investments while a greater financial effort is spent on dealing with the effects of the pandemic” – added professor Czerwińska.
“Local governments need funds for investments, especially now when it is so important that we mitigate the effects of the pandemic. Every third zloty of our bank's credit exposure goes to local governments. We want to strengthen the activities of local government units in sustainable development. Our agreement with the European Investment Bank will make it easier to obtain funds, for example, to adapt city infrastructure to climate change,” emphasized on the conference Beata Daszyńska-Muzyczka, President of Bank Gospodarstwa Krajowego.
BGK's involvement in financing the Polish economy amounted to PLN 46 billion at the end of 2021. The bank allocated PLN 13 billion to the local government sector. Municipalities invest these funds in sustainable transport, road safety improvements or the protection of nature and culture.
The European Investment Bank has been providing strong financial support to Polish local governments for years. Over the past 10 years, the EIB has granted over EUR 6 billion in direct loans to nearly 40 Polish municipalities. The European Investment Bank has financed local government investments in a few sectors such as urban regeneration, sustainable urban transport, climate change adaptation and mitigation, social housing, education and culture. The new financial instrument for smaller towns combines the favorable conditions and flexible nature of the loans granted by the EIB with BGK’s in-depth knowledge resulting from its long tradition of supporting Polish municipalities.
Both institutions are currently working on implementing this instrument and launching new, similar initiatives in other sectors in Poland, signaling the intention to forge closer cooperation between the EIB and BGK.
Following European Central Bank, European Investment Bank (EIB) is one of the most important financial institutions in the European Union. It supports the economic development of the member states mainly through granting preferential loans. EIB was established to support the sustainable development and social and economic cohesion among and outside the community. All the member states are the shareholders of the European Investment Bank.