EIB immediate Covid-19 Response Support to the Georgian MSME Sector Reaches Milestone with Additional Support to Liberty Bank
The EU bank will extend Covid-measures to the existing credit line at the Liberty Bank for a total of €17.5 million, including a €2.5 million multi-currency top-up.
Loan reinforces Team Europe's support for the recovery of Georgian MSMEs from the COVID-19 pandemic as well as sustains jobs, maintains liquidity and operations, and fuels the economic recovery of Georgia.
In 2020 alone, EIB provided €70 million to support the faster recovery of Georgian businesses from the COVID-19 pandemic
The European Investment Bank (EIB), the lending arm of the European Union, and Liberty Bank agreed to expand an existing credit line for Georgian micro, small and medium-sized enterprises (MSMEs) with an additional €2.5 million to a total of €17.5 million. With this signature, the EIBs total Covid-19 immediate response comprises additional lending exceeding € 70 million, and existing loans benefiting from Covid measures exceeding € 90 million.
The EIB loans inject fresh capital into the national financial market at a time when the COVID-19 pandemic is burdening SMEs with liquidity issues and restricting their ability to access finance for maintaining daily operations or funding expansion plans.
The loan agreement was signed in presence Charles Michel, the President of the European Council.
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EIB President Werner Hoyer, said: “Team Europe and the EIB will continue to build up our support for the Georgian MSMEs and fuel the economic and social recovery of the national economy from COVID-19. Last year alone we boosted Georgian recovery from COVID-19 with EUR 170 – 70 million in new lending for MSMES, and 100 million for the reinforcement of the national healthcare sector`s ability to deal with the pandemic. Today, the EIB increased both the amount and the attractiveness of our loans available to MSMEs, as this is the first loan the EU Bank provides to a counterpart in Georgia in local currency. We look forward to maintaining our position as the trusted ally of the Republic of Georgia and a key source of support for sustainable social and economic development.”
CEO of Liberty Bank Vasil Khodeli commented: “I would like to thank EIB and the EU for their continuous support and the confidence they have shown in Liberty Bank. Thanks to the increased loan amount, Liberty Bank will unlock significant additional lending for MSMEs in Georgia. The coronavirus has hit MSMEs very hard and this facility will provide much-needed support for our clients to overcome short-term liquidity shortages, maintain jobs and support economic recovery in the upcoming months. The additional multi-currency facility equivalent to GEL 10 million includes the possibility to make financing available in a local currency, which provides us with greater flexibility to finance and support a wider range of MSME businesses in Georgia. This is also a further sign of our commitment to helping businesses of all sizes to get through the turbulent times.”
Further increasing affordability of EIB loans
The loan introduces the option to make funding available in synthetic lari, Georgia’s national currency, and increases the affordability of the loans for MSMEs. The expansion will help Georgian MSMEs sustain jobs, maintain liquidity to continue operations, and fuel the economic recovery of Georgia from the COVID-19 pandemic.
The investment from the EU bank forms part of the EIB’s SME Outreach Initiative, which promotes access to finance for MSMEs by supporting smaller local banks to better service their clients. MSMEs are the backbone of the Georgian economy and major employers in the country. The loan expansion comes with a €450,000 in technical assistance to support Liberty Bank improve and expand its offer for MSMEs.
Team Europe adds value for Georgian companies
Covered by a guarantee from the European Union, the loan from the EU bank will enable an increase in lending activities to MSMEs without jeopardizing the long-term stability of the country’s financial sector or its ability to support the economic recovery from the pandemic in the long term.
This credit line comes with increase attractiveness to SMEs benefiting from the more flexible lending terms enabled by the EIB’s COVID-19 emergency measures. These measures are extended as part of Team Europe’s efforts to Georgia and other EU partner countries during the pandemic.
To date, the EU bank has invested more than €290 million in credit lines for Georgian businesses, sustaining more than 54,000 jobs in the country.