Experts said the EIB move is the beginning of a greater support from international financial organisations.
By Safet Kabashaj for Southeast European Times in Pristina -- 02/12/13
ProCredit Bank will disburse EIB funds in the form of long-term loans for small and medium enterprises in Kosovo. [AFP]
The European Investment Bank (EIB) credit line to Kosovo agreed to this month is a welcome financial injection to prompt small- and medium-size enterprises that make up the backbone of Kosovo's economy, officials said.
The ProCredit Bank branch in Kosovo will disburse EIB's 10 million euro credit line over a two-year period in the form of long-term loans to enterprises in the production, trade and services sectors.
EIB officials said the move is a sign of the strong support for building a sustainable private sector in Kosovo.
"[It] shows that the EIB passed rapidly from the institutional agreement to the operational and concrete support to the Kosovar economy," said Dario Scannapieco, EIB vice president.
Experts said the EIB credit line is the first step to a greater financial assistance in the future, which will also help attract much-needed foreign investment.
"The small- and medium-sized enterprises represent more than 90 percent of the enterprises operating in Kosovo and imply the biggest employment potential for Kosovo's economy," Flamur Keqa, chief executive of the Institute for Banks and Finances in Pristina, told SETimes.
Keqa said the credit line is important for Kosovo's economic development because the cost of the credit for businesses will be more favourable.
"Obviously, if the credits are offered at affordable terms, having in mind the capacity of SMEs, that will have a positive effect on the process of reproduction of these enterprises and consequently on the country's economic development, especially medium- and long-term prospects," he said.
EIB is one of the largest international financiers in the Balkans. Over the past 12 years, it has provided more than 7 billion euros for projects in energy, transportation, health, education, industry and services, water and sanitation as well as support for SMEs and local government.
The credit line is a very positive moment for Kosovo, though it is small in light of Kosovo's businesses and economy needs, said Agim Shahini, head of the Pristina-based Kosovo Business Alliance.
"More money in Kosovo means an input to strengthening its economy," Shahini told SETimes.
Shahini said Kosovo's business community expects more funds from international financial institutions -- particularly in those in which Kosovo is a member such as the IMF -- at lower interest rates.
"It is very clear that these funds are granted only if Kosovo's institutions present concrete and clear projects as well as [show] the feasibility of projects aiming economic recovery, regardless of whether public or private," Shahini said.
But some experts said they are concerned many Kosovo institutions are not prepared to attract such funds -- except for commercial banks -- and most enterprises will face difficulties in fulfilling eligibility criteria to obtain credit.
"The approach of private businesses into these institutions is a bit difficult, but it will be possible through the Kosovo institutions -- especially if there is a sustainable private-public partnership," Shahini said.
How can the EIB further assist Kosovo in its long-term economic development? Share your opinion in the comments space.