Czechia: EIB Group financing of €1.88 billion in 2023 helps the country to grow greener, better connected and more competitive

EIB building in Luxembourg. [Shutterstock/nitpicker]

• Safer and faster train connections, more green energy for households and businesses and support for small and mid-sized companies are some of the main results expected from EIB Group investment in Czechia in 2023.
• The biggest loan ever provided by the EU bank in the country — almost €1 billion (CZK 24 billion) — is backing the modernisation of strategically important railway infrastructure in several regions.
• Overall, 75% of the total financing committed in 2023 will support climate and environmental sustainability while around 77% will benefit less developed regions.

The European Investment Bank Group (EIB Group) — made up of the European Investment Bank (EIB) and the European Investment Fund (EIF) — invested €1.88 billion in the Czech Republic in 2023. The financing will support regional development and boost economic resilience while also making the country greener and improving the quality of life for its people.

The EIB lent €1.69 billion through 11 operations in the public, private and banking sectors. In addition, the EIF provided €188 million through eight operations aiming to back small and medium-sized businesses. This brings total Group support over more than three decades to around €29.4 billion.

The single biggest EIB loan in Czechia in 2023 (and to date) will boost the quality and capacity of rail infrastructure, especially on the European Union’s Trans-European Transport Network (TEN-T). €985 million in long-term financing will help Správa železnic, státní organizace (SZ), the Czech railway administrator, to modernise some 40 railway sections throughout the country. The works will increase the maximum speed on certain stretches, saving travel time. They will also make level crossings safer and increase the cyber security of SZ’s computer systems. Overall, the upgrade is expected to encourage more people and goods to travel by train instead of cars and lorries, reducing road congestion and pollution.   

Energy is another area in which the Czech Republic massively benefited from EIB support last year. This mirrors the general effort of the EIB Group to back energy security and sustainability, including by contributing to the European Commission’s REPowerEU initiative. This initiative aims to end Europe’s dependency on fossil fuels, and received a record €21.4 billion of EIB Group support in 2023 through projects across the European Union. In Czechia, four of the projects financed by the EIB last year are energy related. From the modernisation of district heating in the city of Brno, to the construction of a plant that produces heat and power from woodchips and the installation of solar panels on industrial buildings, these projects help the country to generate and use its energy more efficiently and flexibly.

2023 also saw continued EIB support for the Czech banking sector, with loans to Česká spořitelna and SG Equipment Finance Czech Republic. These loans aim to back small and mid-sized companies with a maximum of 3 000 employees. These businesses make a significant contribution to employment, innovation and overall economic growth in the country. However, they often face challenges in accessing sufficient funding for business development and expansion, especially in regions with lower economic activity. A large part of the financing unlocked by the EIB is expected to benefit those regions, also known as cohesion areas. The goal is to increase economic opportunities and to contribute to a more inclusive and equitable economy. Given that both of these institutions have a strong ambition to support green projects, the EIB financing will also benefit the climate and the environment.

“Europe doesn’t have a magic wand to wave away economic woes but it certainly has the means to support its countries, regions and people. By financing modern trainlines and heating systems or thousands of small businesses, the EIB Group is helping Czechia to realise its potential. For more than 30 years, we have supported the country with its transformation into a future-oriented and competitive economy, and our results for 2023 show that we are as committed as ever,” said EIB Vice-President Kyriacos Kakouris, who is responsible for EIB operations in the Czech Republic. We are working hard to back Czechia on its green and social path, not just for the benefit of the Czech people but also because every project that tackles economic and social imbalances in one part of the EU will make the whole of our union stronger.”

EIF invests €188 million in digital technologies and innovation-based competitiveness

In 2023, the European Investment Fund provided a total of €188 million in equity, inclusive finance, and guarantees to support intermediated financial institutions. This funding is expected to unlock €484 million for beneficiaries in the Czech Republic.

A guarantee transaction with Komerční banka will enable up to €280 million in new financing for small and medium-sized companies in the Czechia and Slovakia. This funding covers a wide range of sectors, reflecting the EIF commitment to various areas of social activity. The guarantees provided will support approximately 6 500 businesses, making it easier for them to access affordable loans. This is crucial to backing innovation, digitalisation, sustainability, social entrepreneurship, and skills and education. The financing will also benefit the cultural and creative sectors.

In autumn 2023, the EIF backed the first impact investment in Czechia. Impact investments are made with the intention to generate positive, tangible social and environmental impact alongside a financial return. Supported by the European Commission’s InvestEU programme, the EIF acted as a lead investor in Tilia Impact II, a Czech seed fund aiming to finance climate, education and healthcare solutions. The fund is seeking to support around 25 visionary entrepreneurs, about half of which are in Czechia (with the rest being in other Eastern European countries).

In addition, Czechia has entrusted the EIF with managing a €55 million fund backed through the Recovery and Resilience Facility. This fund aims to support early-stage startups and university spin-offs that are focused on developing digital technologies. The fund will invest in three venture capital funds, each with a specific focus, from blockchain to artificial intelligence. This initiative is expected to contribute to the digital transformation of the national economy and the growth of the Czech venture capital market.

EIB Advisory Services to improve the country’s energy efficiency and attract additional EU funds

In 2023, EIB Advisory Services continued to provide advisory and capacity-building support to the government in the Czech Republic and the country’s public and private sector. Last year, EIB Advisory Services took on 44 new assignments benefiting the country and completed five. There are currently 63 active assignments. EIB Advisory Services support public or private entities in Czechia that are involved in developing and implementing projects in areas such as climate and environment, energy efficiency, infrastructure, and sustainable urban development or the just transition of coal regions.

EIB Investment Survey 2023

EIB lending and advisory in the energy sector is particularly important, given that 96% of companies in Czechia report being concerned about recent developments in the energy market in the EIB Investment Survey 2023. The survey, which was published earlier this month, also found that, almost all Czech firms adopted one or more strategies in response to the energy shock. More than two-thirds of firms tried to save energy. At the same time, 59% passed on increased energy costs to their customers and more than half tried to renegotiate their energy contract. Overall, the survey shows that Czech firms are pessimistic about the broader investment environment but optimistic about business prospects in their sector.

This article was first published on 13 February by EIB.