Spain: EIB and Castilla y León Regional Government sign a EUR 130m loan to drive economic growth, competitiveness and jobs in the region

Minister of the Economy and Finance Pilar del Olmo and EIB Vice-President Román Escolano today signed a EUR 130m loan at a ceremony in Valladolid. The loan will drive the implementation of measures to promote economic growth, competitiveness and jobs under three EU programmes covering the 2014-2020 period: the European Regional Development Fund Operational Programme, the European Social Fund and the Rural Development Programme. These resources will be used both to invest in strategic sectors and to finance businesses within the region in order to strengthen production through innovation and internationalisation.

The European Union is supporting economic growth in Castilla y León through the EIB. The region will receive an initial disbursement of EUR 130m out of a total approved amount of EUR 390m.

The remaining EUR 260m will be disbursed according to the level of progress made in implementing the measures, which will be checked by the European Investment Bank using regular monitoring information provided by the Regional Government.

The operation aims to help reindustrialise Castilla y León and support sustainable growth and job creation. To this end, the Regional Government will invest these funds in research and innovation, conservation and improvement of cultural and natural resources, renewable energy, tourism and vocational training. Businesses connected with these strategic sectors in Castilla y León will also be able to access the funds for innovation and internationalisation projects to improve their competitiveness.

 This investment will bring major economic and social benefits – primarily with respect to job creation – and will have a positive environmental impact. Some concrete examples of the programmes set to receive financing centre on areas under special environmental protection because of their high levels of biodiversity.

 The EIB Vice-President highlighted the positive impact this investment will have on the region: "Today, Castilla y León is receiving vital support to safeguard its growth, with the EIB's investment enabling job creation in key sectors for the region's future such as research, renewable energy and tourism."

Lower interest rates and long repayment periods

The operation signed this morning is in line with the debt coverage sources diversification strategy applied by the Ministry of the Economy of Finance and comes in addition to the loan taken out last Friday with the Council of Europe Development Bank.

Low interest rates (lower than those available on the debt market) – together with long repayment periods and high levels of financing – make this kind of debt particularly attractive. In this case, the principal repayment period may last up to 25 years, including a maximum grace period of seven years. The final terms selected by the Regional Government will determine the interest rate to be applied, which could be either fixed or variable.

Castilla y León has been working closely with the EIB for over 25 years. The first operation was agreed in 1989, and since then funding for the regional public sector has increased to reach a total of EUR 1.9347bn spread over more than 30 operations involving not only the General Administration, but also the Innovation, Financing and Business Internationalisation Agency (ADE), the Castilla y León Agricultural Technology Institute (Itacyl), the Castilla y León Public Sector Infrastructure and Environment Company (Somacyl), and the Castilla y León Asset Holding Company (Cylsopa).

EIB resources have been used to fund projects including roads, hospitals, water supply and sanitation infrastructure, and environmental improvements, and have also provided financial support to regional production via intermediated loans.

Number one lender to the Regional Government

In fact, the EIB is currently the Regional Government's number one lender (excluding the Financial Facility Fund – FFF) with outstanding exposure of more than EUR 1.33bn in respect of over 20 loan contracts.

The EIB Vice-President's visit to Valladolid was also an opportunity to review the progress of other collaborative projects with Castilla y León currently being examined by both parties.

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. Its primary objectives are to drive growth and jobs in Europe, support measures to combat climate change and promote EU policies, for which it grants loans with preferential terms.