PFR to accelerate the development of mid-sized cities

PFR to accelerate the development of mid-sized cities

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The Polish Development Fund will actively contribute to the implementation of the Ministry of Economic Development’s Package of Actions for Mid-sized Cities by investing resources of the Local Government Investment Fund managed by PFR and providing consultancy to address investment needs. PFR’s participation will help to activate the economic potential of mid-sized cities, contributing to sustainable development of the regions of Poland.

Mid-sized cities, as opposed to large cities, face problems in attracting investors whose presence is key to city growth. New investors bring new opportunities. They create new jobs and help to develop human capital, products and services.

The Package of Actions for Mid-sized Cities covers a range of diverse and complementary initiatives. The first phase of implementation has just started. It will align the existing tools and instruments, including the policy of investing and attracting investors, preferential access to European funds under national programmes, and raising funds from other sources, including mainly the Local Government Investment Fund (FIS) managed by PFR.

“The co-operation between the Ministry of Economic Development and the Polish Development Fund in the implementation of the Package of Actions for Mid-sized Cities includes an assessment of findings and the financing of investments in modern infrastructure of smaller cities. In view of the current disparities between the growth rate of large cities and mid-sized cities, the programme is a key contributor to an equal playing field across the regions and ensures cohesion in Poland’s regional development,” said Paweł Borys, President of the Polish Development Fund.

The Polish Development Fund invests in sustainable social and economic development of Poland. According to its strategy, PFR operates programmes which bolster the long-term investment and economic potential of Poland, promotes equal opportunities and protects the environment. Infrastructure investments are a priority of PFR Group.

Local Government Investment Fund (FIS)

The instruments offered by FIS provide mid-sized cities with an attractive alternative to debt and subsidies, which may come in short supply. FIS offers support in investments using national funding and capital raised as own contribution to projects financed by EU funds. Potential areas of support include roads, water supply and sewage infrastructure, waste management, electricity and gas supply, social infrastructure, revitalisation, mass transport, and health care.

The Fund offers two investment models of equity investment. For projects of municipal companies, the Fund takes up shares of companies, provides loans as a partner, and offers subordinated debt (loans, bonds). For projects where the local government raises funds to invest in its statutory activity, the Fund acquires the right to shares in municipal companies or takes up shares of existing municipal companies from the local government. The budget of the Local Government Investment Fund is PLN 400 million. Some of this money will be used to support the development of mid-sized cities.

As a part of the Package of Actions for Mid-sized Cities, PFR provides cities with consultancy in addressing investment needs. In the first phase, the pilot will cover several dozen cities selected by the Fund because they cope with problems in continued provision of social and economic functions. The Fund’s experts and the cities will review the development needs in view of potential sources of funding depending on the risk profile of each project. In the second phase of the pilot, the Fund will select more than a dozen projects to invest in under a tailor-made financing model.

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