European Investment Bank (EIB) to provide soft loans
With the signing of the agreement between the Royal Government of Bhutan and the European Investment Bank (EIB), now Bhutan can avail soft loans to finance in various projects like hydropower, climate change initiatives and development of small and medium enterprises and other sectors in the country.
During the signing, Minister of Finance, Lyonpo Namgay Dorji said that Bhutan welcomed the growing engagements with the European Union (EU) and its institutions, and said that Bhutan looked forward to fruitful collaboration with the EIB.
While Lyonpo also stated that this signing ceremony which takes place in less than a year after Bhutan became eligible for EIB’s financial services, demonstrates the seriousness with which Bhutan and EIB intent to collaborate.
“Bhutan’s requirement for long term soft credit will grow in the near future, as we look at building many infrastructure projects such as roads, rural electrification and hydropower plants where grants aid is limited or not available” said the Minister
“EIB will be a valuable source of soft loan for Bhutan which can be used to finance these key infrastructure projects”, he added.
He further said that, more important than fulfilling our financial needs, Bhutan is happy to be working with a financial institution which is guided by strict sets of standards, most notably the environmental standards. Bhutan’s gratitude for the generous enhancement of EU assistance towards Bhutan, from this year is at a time when some of the traditional development partners are phasing out is of significant the minster empathized.
Vice President of the EIB, Mr. Roman Escolano said, this signature is the first step towards EIB operating in the country with a view to providing support through targeted investments to the sustainable economic development policy.
The EIB is the EU’s long term financing institution promoting European objectives; Vice President said that EIB strive to contribute European development cooperation policies in Asia and beyond. Since 1993, they have been operating under nine EU mandates related to Asia.
Till now, EIB have provided more than 5.6 billion Euros for projects in Asian countries.
He said that, EIB action will targeted to three objectives: for instance; social and economic infrastructure, local private sector development and climate change mitigation and adaption.
But these prioritized sectors in Bhutan would be in line with those of Bhutan that had defined by the Gross National Happiness Commission in its 11th Five Year Plan, said the vice president.
He further said that, EIB aim to pass this cost competitiveness through the kingdom of Bhutan and serve as a bridge to the international capital market. Given the alignment of objectives between the kingdom of Bhutan and EIB as well as the large potential for sound investment in the country, EIB is confident that it will be able through its favorable lending condition to bring a decision support to the long term development of the country.
Meanwhile, EIB which is the financial arm of the European Union is the largest international financial institution in the world, and it finances projects in around 150 countries outside the EU.
While, the agreement was signed between Lyonpo Namgay Dorji, Finance Minister, and Mr. Roman Escolano, Vice President of the EIB in the capital on 4th December, 2014.