News and Analysis

A Public Discussion Highlighted Key Issues to Be Addressed by the Urban Development Fund in Financing Economically Viable Projects


On 20 April 2017, Fund Manager of Financial Instruments in Bulgaria EAD (FMFIB) held a discussion with interested parties as part of the market test consultations on the Urban Development Fund (UDF) financial instrument. Participants in the discussion included members of the National Association of Municipalities in the Republic of Bulgaria (NAMRB), members of the Association of Banks in Bulgaria, and representatives of the Regional Urban Development Fund, the Sofia Sustainable Urban Development Fund, the Ministry of Finance and the Managing Authority of OP Regions in Growth 2014-2020. During the event, Bulgarian municipalities and potential financial intermediaries had the opportunity to exchange ideas on structuring the Urban Development Fund financial instrument, and discuss the challenges relating to the successful implementation of projects financed using that instrument.

‘The Urban Development Fund reflects directly the top three elements underlying regional growth. Those are: infrastructure, the economy and living environment. The financial instrument offers financing for urban infrastructure and accessibility, economic zones, and investments in culture, recreation, tourism and entertainment’, said Iliya Karanikolov, Deputy Chairman of the Managing Board and Executive Director of FMFIB EAD. ‘The UDF is a new instrument available to public institutions and the business and it offers an effective alternative for policy implementation in the context of scarce public resources. The instrument enables greater flexibility and higher risk-taking; it provides for an affordable price and bridges the gap between the well-known grant financing, which is increasingly narrowing its scope, and classical financing, driven by purely market logic, which is not affected by public policies. The UDF is the perfect platform for developing new economic relations by fostering project-oriented thinking and forms of cooperation between private and public entities. Expectations are that the instrument will widely encourage attention to the economic viability of each project’, Iliya Karanikolov explained.

In her speech, Ginka Chavdarova, the NAMRB Executive Director, focused on the key questions asked by municipalities about the Urban Development Fund financial instrument.

‘In recent years, certain changes have occurred on the financial market and today it demonstrates a friendly attitude to the investment projects of Bulgarian municipalities. It would be good if municipalities realise the advantages of financial instruments, since they will become a leading factor in project financing in the future’, Mrs. Chavdarova added.

Nadia Dankinova, Executive Director of the FLAG Fund, and Martin Zaimov, Executive Director of the Regional Urban Development Fund, shared their experience and presented the performance results and successful projects financed via the Funds they represent.

The event provoked an in-depth discussion on the structuring of the Urban Development Fund financial instrument. This will enable bridging the market gap in certain segments, with the financial instrument as the match-maker between the expectations of the market and those of the final recipients.