European funds in the form of a loan to help the country recover and build resilience in the aftermath of the COVID-19 pandemic
In its National Recovery and Resilience Plan (NRRP), which was endorsed by the Council of the EU at the end of July 2021, the Republic of Slovenia specified EUR 705 million in loans for recovery and resilience-building measures in the aftermath of the COVID-19 pandemic. For the purpose of implementing these investments, the European Union and the Republic of Slovenia concluded a loan agreement at the beginning of June 2022, setting out the terms and conditions for the implementation of these funds. The signed agreement is the basis for the disbursement of refundable funds from the Recovery and Resilience Facility (RRF).
Slovenia will draw the refundable funds in six instalments, as foreseen in the current Council Implementing Decision on the Approval of the Assessment of the Recovery and Resilience Plan for Slovenia. As in the case of grants, their disbursement will be conditional on the achievement of pre-agreed milestones and targets. The maturity of each loan instalment or tranche will be 30 years, with repayment of the principal of each tranche commencing 10 years from the date of disbursement and maturing in equal instalments until the end of the maturity of the loan tranche.
The cost of borrowing, i.e. the interest rate, will be determined before each payment date on the basis of the cost allocation methodology set out in Commission Implementing Decision (EU) 2021/1095 of 2 July 2021 Establishing the Methodology for Allocating Costs Related to Borrowing and Debt Management Operations under NextGenerationEU. The cost of borrowing is not known in advance, but will depend mainly on the cost of the EU financing instruments (mainly EU bonds and treasury bills) issued to finance the respective disbursements under the loan agreement. Currently, the borrowing terms under the NRRP loan agreement would be more favourable than the borrowing terms Slovenia would obtain for comparable borrowing.
The following recovery and resilience measures in Slovenia are expected to be financed under the RRF loans:
- the generation of electricity from renewable energy sources,
- strengthening the electricity distribution network,
- the Strategy for Greening the Education and Research Infrastructure in Slovenia,
- greening the education infrastructure in Slovenia,
- ensuring a safe living environment for dependent persons,
- the provision of public rental housing,
- increasing the capabilities of the railway infrastructure,
- reducing flood risks and reducing risks related to other climate-related disasters,
- urban waste water discharge and treatment projects,
- projects for supplying and saving drinking water.
- Slovenia can apply for additional loans of up to EUR 2.5 billion until 31 August 2023. Only part of the available loans was planned when the NRRP was prepared.
To be eligible for payment, milestones and targets covered by the loan shall be completed no later than 31 August 2026.