Knesset vote brings EIB loans closer

EIB approves program to provide up to €75 million in loans to Israeli small and medium-sized enterprises.

February 24, 2006 02:10
2 minute read.


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Initial Knesset approval this week of a technical amendment needed before Israel can finally ratify the framework agreement signed in 2000 with the European Investment Bank has brought renewed loaning activity by the institution in Israel one step closer. "The fact that this obstacle is on the way to being removed means that, in due course, the framework agreement will be ratified, and then (the) EIB will be in a position to sign loans in Israel," EIB Near East director Jane McPherson told The Jerusalem Post Thursday. A program to provide up to €75 million in loans to Israeli small and medium-sized enterprises through Bank Hapoalim was recently approved by the EIB board of directors, she noted, "but we can't disperse any funds in Israel until the framework agreement has been ratified." McPherson has been in Israel for a week to participate in a conference on providing funding for the Hadera desalination plant project, at the invitation of the Industry, Trade and Labor Ministry. "We'll see over the coming weeks whether we'll make an offer," McPherson said. The Bank Hapoalim loan scheme, approved by EIB at the end of January, marks the end of a decade of EIB absence in Israel. McPherson said the long interval was the result of a lack of interest among Israeli project developers, compounded by Israeli government policy not to secure the loans with a state guarantee, which the EIB was made aware of in the late 1990s. "It was not from lack of readiness on our side to finance projects in Israel," she said. About four years ago, EIB was examining participation in port and railway projects, "but it was made clear to (the) EIB that the government was not willing to issue guarantees for those operations," she said. The bank's 2003 creation of FEMIP (the Facility for Euro-Mediterranean Investment and Partnership) brought with it new financing tools enabling the EIB to lend without state coverage, leading the bank to renew contacts with Israeli project developers, she said. While in town, McPherson was presented with a series of transportation projects for EIB to consider, including Route 531, rail links, and express lanes entering Tel Aviv and Jerusalem. The bank also provided offers to all three consortia bidding on the Tel Aviv light-rail project and has begun due diligence, she said. Under the Bank Hapoalim program, loans would be provided to small-scale private sector projects including gas, water and electricity projects. EIB provides a maximum of 50% of a project's investment cost. Repayment of the loan can range from eight or 10 years for SME loans (by the intermediary, such as Bank Hapoalim) to 15-20 years for large infrastructure projects, McPherson said.

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