The European Commission has invested an additional €40 million into the European Fund for Southeast Europe (EFSE), supported by the EU under its EU4Business initiative, to help combat the economic effects of the COVID-19 pandemic in the Eastern Neighbourhood and the Western Balkans.
The funding will be used to bolster the ability of local financial institutions to support micro- and small enterprises in overcoming the challenges of the crisis. A significant portion of the sum has been specifically designated for financing in local currency – providing an extra level of security by safeguarding borrowers from exchange rate risk.
According to a study conducted by the EFSE Development Facility, four out of five small businesses in targeted regions have experienced ‘negative to extremely negative impact’ on their operations, with others reporting temporary layoffs that could become permanent. In 2020, EFSE’s funding to 66 financial institutions in these regions facilitated 40,000 new loans to entrepreneurs and households, helping sustain over 91,000 jobs. Over 57% of these loans were provided in local currency.
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