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Mr Krešimir Ivančić,Assistant Minister

Ministry of Agriculture, Croatia

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EAFRD Financial Instruments: Croatian ExperienceLoan and Guarantee Fund in Croatia

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FI allocation

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7%6% 6%

0

100

200

300

400

500

600

700

M4 M6 M8

Measure total allocation FI allocation

M€

total RDP allocation2.383 M €

grants 97%

FI allocation70.6 M €

3%

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Proposed FI Investment Strategy

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Micro and Small Loans for Rural Development

Individual Guarantees for Rural Development

Investment Loans for Rural Development

FIs facilitating growth and development of agricultural producers, food processors and forestry sector

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Launching RDP FIs: steps taken

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Modification of the RDP to incorporate FI

(modification RDP v 5.3 approved)

Ex-ante assessment(finalized in March 2018)

Management structure set up: signing Financing agreements

(Financing agreements signed in April 2018)

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Ex-ante assessment: financing gap

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465

768

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Yearly sectorial financing gaps (MEUR)

AgricultureProcessingForestry

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Ex-ante assessment: findings

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Key issues in access to finance:

- insufficient collateral- financial sector highly selective

approach to financing agriculturalproducers

- high interest rates- loan processing fees and various

related insurance policiesincrease investment costs

- lack of own contribution

Financing needs:

working capital refinancing purchase of tangible and intangible assets:

livestock, annual plants, productionspace, machinery & equipment

rent of machinery & equipment launching new products % services developing international activities & entering

new markets improving energy efficiency of companies

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Selection of bodies implementing FIs: relying on national capacities

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• As per CPR Art 38 (4b) iii (national public SMEagency)

• 2 years experience in ERDF FIs: Micro and SmallLoans, Individual and Portfolio Guarantees (150MEUR ERDF contribution)

• Vast experience in providing loans & guaranteesfrom national schemes to agricultural sector

Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO)

• As per CPR Art 38 (4b) ii (national public developmentbank)

• 2 years experience in ERDF FIs: Growth & ExpansionLoans (110 MEUR ERDF contribution)

• Vast experience in providing loans from nationalschemes to agricultural sector

Croatian Bank for Reconstruction and

Development (HBOR)

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Key features

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- Faster delivery & fasterrealisation of investment

- Processing of applications‘1st come 1st served’

- Eligible costs: liveanimals, annualplants, usedmachinery, workingcapital

- Less reporting obligations

- Ineligible costs:incurred beforesubmission of requestfor financing, non-recoverableVAT, refinancing

- No combination withany ESIF grants and/orFIs

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Achieve more with less

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2.7

8.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

GRANT FI

NO. OF FINAL RECIPIENTS/ 1 MEUR

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Value for money

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1 1

1.4

2.6

0

0.5

1

1.5

2

2.5

3

1 2

RDP amount invested(MEUR)Investment volumemobilized (MEUR)

GRANT FI

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Next steps

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Micro and Small Loans

Approval of the Loan programme

by Croatian Government

Individual Guarantees

Approval of the Guarantee

programme by Croatian

Government

Open call for financial

institutions

Investment Loans

Public procurement – selection of

financial intermediaries

June 2018

July 2018

By end of 2018

Available to final

recipients

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Obstacles faced

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What we gave up Why

Combination of FIs and grants

Combination disables flexibility in eligibility of costs

Grant calls should ideally be ‘permanently’ open calls

Sequence of payment installments should be different (noadvances - no refunds)

Very likely prolonged approval procedure due to coordinationin checking maximum support rates and amounts

Stand alone working capital products

EAFRD more rigid requirements in the Guidance(requirements for investment to be supported via EAFRD)

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Prospects (expectations) (I)

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Legal certainty: clear, straightforward and timely legal framework Substantial grants support to types of operation which are not

adequate for FIs Easily manageable FI & grant combination focused exclusively on

maximum support rates and amounts at the completion ofinvestment

Prerequisites for efficiency: practical, flexible, simple, quicklyimplementable solutions enabling adaptability

Reducing complexity to ensure synergy between grants and FIs

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Prospects (expectations) (II)

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Greater financialresponsibility:multiplication, mobilisation of privatecapital for publicpolicy purposes &re-usage of funds

Clearer prioritiesand enhancedtransparency:higheraccountability ofpublic decisionmakers

More trust amongstakeholders: bettercommunication &better governanceof CAP

Boosting entrepreneurial collectivementality & needs driven applications:away from process-orientation towardsresult orientation

Less complexity enabling(MA) fast response tochange

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Thank you!

Kresimir.Ivancic@mps.hrCroatian EARFD FI team: FI.PRR@mps.hr

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