articles | 22 February 2023

EIB: €250 mln allocated to projects in Cyprus

The European Investment Bank (EIB) this week announced that new financing agreements signed in Cyprus for the year 2022 amounted to €250 million, with all of them relating to green projects.


In 2022, the EIB allocated €150 million to support a large-scale urban regeneration project, which aims to help Cypriot municipalities become greener, stimulate the economy and improve the quality of everyday life. In addition, a strong emphasis was placed on supporting local entrepreneurship with the €100 million agreement signed under the Cyprus Entrepreneurship Fund II. This Fund is a risk-sharing instrument and aims to support local SMEs and mid-caps in this difficult period.

Moreover, the EIB agreed to take over the management of the newly established Cyprus Equity Fund (CEF) – the country’s first private equity fund. As stated in an EIB statement, Finance Minister Constantinos Petrides expressed his satisfaction with the ongoing, strong cooperation between Cyprus and the EIB. This cooperation, he added, was decisive in Cyprus’ efforts to promote new investments for entrepreneurship, sustainable development and the regeneration of urban areas.

He also said that under the CYPEF II agreement, Cyprus aims to make available new long-term financing to help SMEs and mid-cap companies in this extremely difficult economic climate. “Furthermore, with the agreement on new urban investments, we aim to regenerate and upgrade urban areas as well as promote the creation of greener public spaces, enabling Cyprus to achieve its sustainability goals,” Petirdes explained.

In 2022, the EIB Group’s support for Cyprus corresponded to 0.94 per cent of GDP, the second highest percentage after Greece among all EU countries. What is more, the total exposures of the EU bank to date amounted to approximately 12 per cent of the country’s GDP, putting Cyprus at the top of EU countries in which the EIB operates in terms of the support it offers on a per capita basis.

The bank said that the latest support it has provided, along with the many years of activity in Cyprus, underline the commitment of the EIB Group to the island, especially in the last few years, which have been difficult for the Cypriot economy.

In the period between 2013 and 2022, the lending activity of the EIB in Cyprus amounted to a total of €2.5 billion. “In 2022, the EIB Group exceeded its targets in Cyprus, as vital urban investments were approved, which will help Cypriot municipalities become greener, stimulate the economy and improve the lives of citizens,” said Lilyana Pavlova, Vice-President of the EIB and responsible for granting loans to Cyprus. “In addition, the support programme for SMEs and mid-caps is crucial for local businesses in these difficult economic times, facilitating the access of start-ups and innovative companies to alternative sources of financing,” said added.

In addition to financial support, the bank added, the number of important advisory services provided, mainly in the transport and energy sectors, will help the country accelerate climate-friendly investments. In an important year for EIB Group activity in Cyprus, the biggest project of 2022 was by far the municipal strategic plan for sustainable development. The plan, which was drawn up by the Cypriot government and the Union of Cyprus Municipalities, will fund a series of projects aimed at revitalising and restoring municipalities across Cyprus.

The EIB is backing the project with a €150 million framework loan, signed in November 2022, and will offer technical support through its Advisory Hub. Moreover, the EIB was appointed by the Republic of Cyprus as the manager of the first private investment fund, the Cyprus Equity Fund (CEF). The CEF is supported by public funds and its primary objective is to facilitate the access of start-ups and innovative companies to alternative sources of financing.

The equity investment market in Cyprus is taking its first timid steps and does not have the depth that one would expect from a local investment community, which could support investment rounds, as well as local venture or private equity funds. The initiative, with a total budget of up to €30 million, will be co-financed by the Recovery and Resilience Mechanism with a contribution of up to €20 million and reinvestments from the pre-existing JEREMIE programme with a maximum contribution of €10 million.

Source: Cyprus Mail

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