Lithuania to receive fresh EU funding

Country:  Lithuania

24 June 2009

The European Investment Bank (EIB) and the Baltic state of Lithuania have agreed to set up a fund of almost £200m to finance new sustainable urban developments in the country, particularly in the capital of Vilnius.

The money will be provided by the European Regional Development Fund and a budgetary contribution from the Lithuanian government, financed through an EIB loan. The fund is part of the Joint European Support for Sustainable Investment in City Areas (JESSICA, which brings together the commission and EIB).

A number of energy-efficiency residential-led projects will be constructed with the fresh funds, while Lithuanian banks will provide soft loans with favourable interest rates and longer maturities for those buying or promoting multi-apartment buildings.

The Lithuanian property market has suffered amid an astonishing economic slump. Property prices in the capital of Vinius have depreciated by around 30% over the past year, while the country’s economy contracted a preliminary 12.6% in Q1 2009.

Lithuania’s economic decline is the third-deepest in the European Union after Latvia, whose gross domestic product shrank 18% in the same period, and Estonia, whose GDP slumped an annual 15.6%.

Lithuania’s Finance Ministry forecasts that the economy will shrink by 10.5% this year, while the central bank estimates that GDP may contract 15.6% on shrinking domestic demand and lower exports.

See Also:   Dubai, Marc Da-Silva