EU bank and Georgia agree on co-operation in agri-food sector

The European Investment Bank (EIB) on Thursday undertook to finance the agri-food sector in Georgia. EIB lending will help Georgia to take advantage of the Deep and Comprehensive Free Trade Area (DCFTA), an initiative under the country’s Association Agreement with the European Union.

EIB Vice-President Wilhelm Molterer and Georgia’s Agriculture Minister Otar Danelia signed a Declaration of Intent to set up a financing facility for the benefit of Georgian small and medium-sized enterprises active in the wine industry and horticulture.

Subject to a successful outcome of the project negotiations, this would be the EIB’s first loan to Georgia’s agri-food sector.

Under the facility the EIB would finance up to 50% of the cost of eligible projects. The finance would be channelled via intermediary financial institutions in Georgia. While details of the project are yet to be determined, the EIB finance will mobilise further external or domestic resources such as final beneficiaries’ own funds, loans from local commercial banks, and other international financial institutions, grants available from various donors and national budget resources.

The project is also expected to be supported by the EU through grants made available by its Neighbourhood Investment Facility for blending and capacity building purposes.

Agriculture and the food and beverage industry are among the key sectors of Georgia’s economy, and increased international competitiveness will allow the country to make the most of the DCFTA and increase its exports to the EU.

The EU is Georgia’s most important trading partner, accounting for more than a quarter of Georgia’s total trade. The free trade area was set up in September 2014.

Cooperation between Georgia and the EIB has picked up in recent months bringing the total volume of EIB loans to EUR 530 million. Last month, the EIB opened a representative office in Tbilisi.

The EIB lent EUR 1.2 billion in the Eastern Partnership countries in 2014. Total lending commitments in the region amount to EUR 4.4 billion.