29th October 2021, Skopje – Minister of Finance, Fatmir Besimi, together with CEO of TIDZ Directorate, Jovan Despotovski presented the new Strategic Green Investment Fund created under the Growth Acceleration Plan. This is the first instrument, presented before the public under the Growth Acceleration Plan, under which EUR 4 billion are projected to be invested by the public sector, whereby private capital of EUR 8 billion is to be additionally mobilized.
TIDZ Strategic Green Investment Fund will be intended for both domestic and foreign investors, focusing on medium-sized and large companies. Concept of this Fund was mutually developed by TIDZ and the World Bank in the past nine months.
“The idea for the Growth Acceleration Plan was conceived even while adopting the 2021 Budget and we have been working on this concept, together with the international financial institutions, the business community and all involved institutions, for a year now. This concept aims to provide for accelerated growth, thereby responding to the required transformation as a whole, also including the digital transformation, the fiscal implications of the pandemic-induced crisis, while maintaining fiscal consolidation at the same time. This could be attained via investments, and the only way to ensure growth, scale up investments, without thereby increasing the public debt and the budget deficit is by having the very such concept in place”, Minister of Finance, Fatmir Besimi said.
According to him, this concept does not mean new borrowing but rather the same amount of cash funds generated from the private sector for each Denar of invested government funds or citizens’ money. In other words, instruments envisaged under the Plan are designed in a way, which will provide for attracting private capital without any additional borrowing and tax burden thereon. Envisaged public investments of EUR 4 billion and additional EUR 8 billion as private capital will generate EUR 12 billion, implying accelerated growth, increased budget revenues, boosted competitiveness, and thus successful implementation of this Plan. According to the Minister “this will be a beautiful story, which degree of implementation could be monitored and we assume full responsibility therefor”.
In addition to the Government, partners in the financial structure, via TIDZ, are also international financial institutions, as well as private funding partners – banks, capital funds, and individuals.
“Mechanism will be operating by having the Government’s Strategic Green Investment Fund cooperating together with the respective private institutional investors. With the share of the state not accounting for more than 10% therein, we want to incentivize the private capital investments, primarily of the banks in the country, but also those from abroad, in projects and green infrastructure and technologies, thus boosting accelerated economic growth. No increased public debt is envisaged under the Green Strategic Investment Fund”, Despotovski explained.
The return on financing will be through lease, royalties and other bases, and the share of all those involved in the Fund will be distributed based on their contribution to the total fund.
“The logic of the funding itself is that we invest in projects that generate concrete income to TIDZs and investors. Our goal is to absorb some of these revenues, thus further encouraging such investments. Fund is designed to boost investments worth EUR 750 million in the upcoming 4 years, add an additional 1% to the current GDP growth, and even more important to create at least 15000 well paid jobs, as well as to significantly increase export by EUR 2 billion compared to the existing one. We have realistic goals, which could be fulfilled in the next 4 years with such smart financing”, Despotovoski said.
He also underlined that such two major projects, which are to be financed through this Fund, are already being implemented. Sustainability Study is already being prepared aimed at installing photovoltaic power plants in TIDZ and creating special technological-development green zone, with Gevgelija being one of the potential locations therefor.
“Full implementation of these projects would cost over EUR 120 million. According to the so-far manner of functioning, these funds would have been provided from the Budget or via borrowing. According to the new model we presented today, the Government will provide only 10%, while the remaining 90% will be provided from a private source of financing. The effect on the public debt will be Denar 0, and neither the citizens will be obliged to pay interests on these projects in the coming years,” Despotovski explained.
Anyway, the new Fund objectives are facilitated financing of the private sector to end of transiting towards a modern, efficient and competitive economy with zero emission of greenhouse gases up to 2050, improved harmonization of North Macedonia with 2020 Sophia Declaration on the Green Agenda for the Western Balkans, as well as with the EU, reduced Government’s fiscal burden and establishment of a Fund with multiplying effects via scaled-up private investing, encouraging accelerated economic growth by attracting foreign and domestic investments in “green industries”, as well as job creation.
Green Fund rests upon two pillars, the first one being promotion of green investments in North Macedonia, including green infrastructure capacities for investors in the zones, energy and transport sectors, i.e. linking the main road and railway traffic lines in the country, as well as with respect to the services as a whole. Second pillar pertains to increasing the technologic readiness of domestic companies to get involved in the global supply chains.