The European Investment Fund has approved a €35 million guarantee to the Croatian Bank for Reconstruction and Development (HBOR), allowing it to "originate a portfolio of €50 million" to mitigate the economic consequences of the Covid-19 pandemic, state agency Hina reported on Friday, citing a press release from the state development bank HBOR.

HBOR will approve loans at interest rates reduced by 0.403 percentage points or only with bills of exchange and promissory notes as collateral.

The EIF guarantee stems from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the European Investment Bank Group in 2020 to accelerate the post-Covid-19 recovery of the European economy.

The EGF guarantee will allow HBOR to offer loans to Croatian SMEs and small mid-caps under more favorable terms, including reduced interest rates or lower collateral requirements. The loans will available to “SMEs and small mid-caps” operating in some of the hardest hit sectors of the Croatian economy, including tourism and manufacturing, Hina said.