New CEB loan to Iceland to improve public infrastructure and energy efficiency
19 November 2021
PARIS - The Council of Europe Development Bank (CEB) has approved a €20 million loan to Municipality Credit Iceland to improve living conditions in urban and rural areas through modernisation of urban and rural public infrastructure, improvement of public services, as well as energy efficient investments.
The loan will partially finance eligible investment projects undertaken by Icelandic municipalities and municipal companies through Municipality Credit Iceland as the intermediary financial institution.
“The approved loan addresses the priorities set in Iceland’s Regional Policy 2018-2021, namely the improvement of social infrastructure and continued availability of long-term financing for municipalities to achieve recovery from the COVID-19 pandemic, and ensure economic growth and employment,” explained CEB Governor Rolf Wenzel. “In addition, through its component on the protection of environment, the loan will also support the implementation of Iceland’s Climate Action Plan that was issued in 2020.”
The country’s climate policy strives for carbon neutrality and phasing-out of fossil fuels in the medium term. More than 85% of Iceland’s primary energy supply and almost entire electricity production already comes from renewable sources, mainly geothermal and hydropower.
The loan therefore targets municipal investments, including energy production and distribution facilities, which shall further contribute to the efficient use of energy and lower the greenhouse gas emissions.
At least 50% of the loan is expected to be allocated to green investments, notably to sub-projects that will be expected to have positive environmental benefits, thus contributing to green finance.
This is the fourth operation with Municipality Credit Iceland and follows the successful implementation of a €20 million loan approved in 2006, a €30 million loan approved in 2008, and a €10 million loan approved in 2017.
A founding member of the CEB, Iceland has received loans totalling €40 million from the Bank to support environmental protection and improve living conditions in rural and urban areas. Iceland has also donated resources to the CEB’s Migrant and Refugee Fund (MRF).
Set up in 1956, the CEB (Council of Europe Development Bank) has 42 member states. Twenty-two Central, Eastern and South Eastern European countries, forming the Bank's target countries, are listed among the member states. As a major instrument of the policy of solidarity in Europe, the Bank finances social projects by making available resources raised in conditions reflecting the quality of its rating (Aa1 with Moody's, outlook stable, AAA with Standard & Poor's, outlook stable, AA+ with Fitch Ratings, outlook positive and AAA* with Scope Ratings, outlook stable). It thus grants loans to its member states, and to financial institutions and local authorities in its member states for the financing of projects in the social sector, in accordance with its Articles of Agreement.