Renewables

North Macedonia to establish strategic green investment fund to boost green economy

North Macedonia to establish strategic green investment fund to boost green economy

Jovan Despotovski (photo: Free Zones Authority)

Published

October 29, 2021

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Published:

October 29, 2021

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North Macedonia said it would establish a strategic green investment fund for green structures, technologies, and infrastructure. The mechanism is expected to spark investments worth EUR 750 million, create 15,000 jobs, boost economic growth by one percentage point, and increase exports by EUR 2 billion over the next four years.

The goal of the planned strategic green investment fund for free economic zones is to make financing easier in the private sector for the transition to a modern, efficient and competitive economy with zero greenhouse gas emissions in 2050 at the latest, improve North Macedonia’s compliance with the Sofia Declaration on the Green Agenda for the Western Balkans and EU rules, limit budget expenditures and increase growth by attracting foreign and domestic private investment in the green economy.

The proposed fund is part of the government’s plan to speed up economic development. It was designed by the Free Zones Authority and the World Bank.

The fund is planned to be established with EUR 70 million from public funds, international financial institutions and private investors

The idea is to secure EUR 70 million from public funds, international financial institutions and private investors like banks, investment funds, and individuals. The fund’s share in privately-owned projects won’t exceed 40 percent.

According to Jovan Despotovski, director of the Free Zones Authority, decisions on investment projects will be made by an expert panel.

The government’s participation was limited to 10 percent to encourage the inclusion of private capital in projects for green infrastructure and technologies

The government decided to limit its share to 10 percent to encourage the inclusion of private capital, primarily banks in the country, but also from abroad, in projects for green infrastructure and technologies that would accelerate economic growth, Despotovski said, adding that it won’t affect public debt.

The logic of the fund’s financing is to invest in projects that could generate income for the Free Zones Authority and investors, he underlined.

Two projects in the pipeline will be the first to be financed by the new fund

Two large projects which are currently in the pipeline will be financed under the new fund. It is the installation of solar photovoltaic power plants in free economic zones and the creation of a special technological development green zone for which one of the possible locations is Gevgelija.

The implementation of the said projects costs over EUR 120 million, which would imply budget financing or taking on debt. With the new fund, the government would provide only 10%, and the remaining 90% would come from private sources, Despotovski underscored.

According to the Free Zones Authority, the fund is based on two pillars: promotion of green investments including infrastructure for investors in the free zones, energy, transport, services, and raising the technological capability of domestic companies to engage in global supply chains.

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