Ljubljana, 01 November (STA) - The European Investment Bank (EIB) is making an effort to increase its funding of research and development projects in Slovenia, its vice-president Anton Rop of Slovenia said in an interview for the STA.
Limits put on state borrowing make the role of EIB in supporting R&D even more important, yet only the most important projects qualify for the bank's relatively favourable loans, said Rop, who took over in August.
Rop was in Slovenia last week when he signed a EUR 50m loan contract with the state-owned SID export and development bank for the automotive industry. He said SIB was one of the best Slovenian partners of EIB's.
While both SID and other Slovenian banks are complaining about the lack of sound R&D projects, Rop said he would be meeting Development and European Affairs Minister Mitja Gaspari to see how EIB could back such projects.
He said the idea was to combine budgetary and EIB funds with those from the European Investment Fund. "We'll try to find a system which would enable to multiply the volume of funds Slovenia has at its disposal with European funds, both loans and grants."
"At the same time one will have to find projects which could return the invested money. Only then will one see if there are any such projects in Slovenia."
However, Rop pointed out that apart from research institutes, companies could compete for EIB funds as well. "Why wouldn't pharma company Krka take part, for instance. Foreign pharma companies cooperate with EIB directly," said the former Slovenian prime minister (2002-2004).
Asked about EIB's involvement in tackling the economic crisis, Rop said the bank has been active in helping EU members particularly by supporting industries within the EU. The volume of EIB loans in 2009 increased to nearly EUR 70bn in 2009, he said.
Moreover, the EIB vice-president in charge of Bulgaria, Czech Republic, Hungary, Poland, Slovakia and Slovenia said that EIB had been particularly active in boosting economic and social cohesion and convergence in EU newcomers; in 2009 alone its loans increased by EUR 13.5bn there.
In Poland, for instance, the bank has just recently signed a contract on a EUR 2bn loan to co-fund cohesion projects, with the total amount of loans for Poland to reach some EUR 6bn. In Bulgaria, EIB is making an effort to boost the drawing of cohesion funds, he explained.
Rop said that a drop in credit rating of Slovenia's three largest banks would affect the cost of their borrowing, which will increase the role of EIB's more favourable loans for the Slovenian economy.
However, EIB, whose aim is to finance viable capital projects which further EU goals, can fund only the highest-priority projects, he added.
Asked about the role Slovenia's largest bank NLB played during the crisis, Rop said it was successful in some projects and perhaps somewhat less in others. "But if it is established that this has happened also due to political pressure, everything should be done to eliminate such pressures."
Rating firms are monitoring reforms, including those designed to cut public spending. Asked if Slovenia's rating could be lowered, Rop said he hoped the government would manage to carry out some of the reforms, including pension reform, because a drop in rating would entail a higher cost of borrowing.
The author of the pension reform from the mid 1990s when he was finance minister, Rop said he warned back then that further steps would have to be taken soon. He believes the pension system should have been reformed several years ago when the economic situation was more favourable.
He said every government is faced with a dilemma whether to undertake gradual or radical reform. The government of Janez Drnovsek under which he was in charge of drafting the pension reform, decided to do it gradually, yet nevertheless significantly raised the retirement age.
He said deciding on a bolder reform back then would mean failing to secure the consensus from the social partners.
Touching of a controversial new generator at the TES coal-fired power station, Rop said EIB, which helped assess the EUR 1bn investment, was closely monitoring the developments in Slovenia.
He said the bank as the one giving a loan was interested in the project being carried out with as little problems as possible, but if the government decides otherwise, this will not the end of the world for EIB.