Remišová Department plans to allocate 600 to 750 million euros from Eurofunds for financial instruments – euractiv.sk
This is approximately five to six percent of the seven-year Eurofund allocation. The European Investment Bank recommends setting aside twice as much for repayable aid. However, the state financial instruments such as loans direct capital inputs can also be used in the recovery plan or agricultural policy.
The Ministry of Regional Development and Informatics (MIRRI) is finalizing the preparation of a new Eurofund period. At the end of April, the comment procedure on Slovakia Programbasic document for setting up the drawing of money from EU funds for the period 2021 to 2027.
It is a very broad document that sets out in detail how much money will flow to each area and priority, how the money will be distributed by the regions, but also how much of it will go to repayable financial support, the so-called financial instruments.
These take the form of soft loans, guarantees, or Eurofunds, the state invests in projects directly – unlike grant aid but also with the prospect of return on investment. Financial instruments for the state are managed by the state investment fund Slovak Investment Holding (SIH).
Eurofunds for financial instruments Slovakia used in the catching-up programming period. They have proven themselves and so the state counts on them in the new programming period.
From one euro three
However, in addition to the evaluation of financial instruments in the previous programming period, the Ministry of Regional Development in the Slovakia Program does not state whether anything will change in the coming years. This is also pointed out in the comments by the Ministry of Investment, which explains to MIRRI how they will be implemented in seven to seven years.
“Financing Slovakia’s investment priorities through financial instruments is a more sustainable way of helping with less market intervention. It allows for the repetition of funds on more favorable terms as well as market conditions, “justifies the reintroduction of the ministry. Another advantage is that they can be used repeatedly and know more projects.
It is not yet clear from the Slovakia Program how many of the new Eurofunds will go for repayable support.
In the previous period, the government introduced financial instruments in EU funds in 2015, ie two years after its launch. At that time, a total of around € 400 million was managed for the financial instruments in the individual operational programs, which was about three percent of the more than € 13 billion in euro fund allocation. Ministries later – especially in connection with the pandemic and financial assistance to the affected companies – also set aside additional money until the volume of repayable aid climbed to one billion euros.
The European Investment Bank (EIB) is proposing to significantly increase the return on investment allocation for the period 2021-2027. The bank researched what investment gaps Slovakia has in the areas of the economy and how they could find them financial instruments. Finally, it recommends allocating up to € 1.46 billion from Eurofunds for seven years.
However, the initial allocation for financial instruments will be about half. This follows from MIRRI’s responses to questions from the EURACTIV Slovakia portal. The Ministry expects that at the moment of approval of the Slovakia Program, the returnable investments will be allocated 600 to 750 million euros. In the upper limit, it is thus about six percent of the 12.3 pairs that Slovakia will be able to draw from the new EU funds. It cannot be ruled out that, as in the previous period, the government will increase this allocation over the Eurofund cycle.
MIRRI expects that this money will be able to accumulate private resources and bring up to 2.2 billion euros into the economy. “This means that Slovakia has a unique opportunity to convert every euro from the budget into three euros,” the ministry believes.
The mechanism for implementing financial instruments will not change. They will be managed by SIH, which, according to MIRRI, has gained extensive experience with repayable assistance. As before, the State Housing Development Fund will be in charge of the renovation of apartment buildings.
While grants from Eurofunds should be used mainly to support public institutions, financial instruments, as a sector, should be used primarily for business projects.
Golden period for repayable assistance
However, the state is going to expand its financial instruments beyond the Eurofunds. They have also been used in the Common Agricultural Policy since 2023. The Ministry of Agriculture plans to allocate 300 million euros to help farmers with loans, from which it expects to receive another almost 800 million euros into the sector.
The National Recovery and Resilience Plan for Research, Development and Innovation funding already provides for financial instruments. It provisionally envisages three different financial instruments worth € 38.4 friendships. They support digital and green businesses, which have direct growth potential: more than 14 million will be invested by start-ups in start-ups, the same amount will be invested in companies and will provide nine million euros through microcredit.
The government’s goal is to reach at least 150 companies by 2026.
“These companies are expected to continue investing in research. The establishment of these companies can thus use the research and development environment in Slovakia, “explains the National Implementation and Coordination Authority (NIKA) operating under the government office.
The implementation mechanism will be similar to the Eurofunds, including the key role of Slovak Investment Holding. However, the recovery plan is governed by other, generally drawn on rules, which would make the EU fund important and other financial instruments.
However, for both sources, the beneficiaries will be able to combine financial instruments with grants. “However, it is not possible to address all the methods of financing one project that has decided to follow the rules for financial instruments. Each separate project is governed by the rules active by the mechanisms through which it is funded, ”replies NIKA.
In Eurofunds, a combination of repayable and non-repayable aid is envisaged in one operation. “Experience with financial instruments has shown that the model of combining repayable and non-repayable aid in one operation is faster, more flexible and of better quality than the model of two operations. Financial instruments have simpler rules than grant aid. Contracts with financial intermediaries should also include the possibility to exercise the option, “adds MIRRI.