The European Investment Bank – a less known funding source for investments

Abstract

The European Investment Bank (EIB), as an institution of the European Union and as the world’s largest multilateral financial institution is one of the most important financial partners of Hungary. Originating from the early times of the European integration it plays an outstanding role in the financing of infrastructure development, SMEs and Mid-Caps, combating unemployment (especially youth unemployment) and promoting renewable energy projects. Beside the EU budget, the EIB’s financing contributes significantly to the member states’ development and investment goals. Since 1990 and especially since the EU accession, Hungary has received a significant amount of the EIB’s financing and enjoyed the technical assistance of the EIB to the EU grants. However, EIB could provide much more financing to Hungary than it has absorbed in the last decade, to help our country accelerate its development. Currently, with the 2014-2020 program period, Hungary receives a significant financial support of the European Structural and Investment Funds (ESIF). However, a decrease of this financial support beyond 2020 cannot be excluded, even if the needs for investments and investment finance will remain unchanged. Hungary will need to find new sources. If the non-refundable financial sources are not available at the same level as under the current Multiannual Finance Framework, they will have to be substituted by refundable sources, preferably with the most advantageous conditions (in pricing, maturity, security structure etc.). From 1990 until now, the EIB has provided financing to Hungary in a volume of EUR 19.3 billion, and as it is the largest multilateral financing institution of the world, it can make further sources available. This paper is about this unique institution, about what it is designed to finance, and what it can finance in reality. Keywords: European Investment Bank, finance, structure, finance conditions investment