FAQ

1. What is MIDF?

MIDF’s is an innovative financing vehicle, dedicated to provide debt financing for municipal infrastructure projects in Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia. It was established in Luxembourg as a private variable capital investment company (“SICAV”) under Luxembourg law.

MIDF’s operations are supported by a Technical Assistance Facility, which is instrumental for the achievement of the mission and objectives of the Fund.

MIDF is funded by contributions from the Austrian Ministry of Finance, the German Federal Ministry of Cooperation and Development, the European Bank for Reconstruction and Development, the German development bank KfW, the Swiss Secretariat for Economic Affairs (SECO), and Frankfurt School of Finance and Management.

 

2. Why was MIDF established?

Local infrastructure across the Western Balkans suffers from a significant backlog of investments. Recent financial and economic distress limited funding availability for infrastructure investments. As a result, municipalities are often unable to access the funding required for crucially needed investments. This is an inappropriate and unsustainable situation.

To tackle this challenge, the European Bank for Reconstruction and Development (EBRD) and KfW established the Municipal Infrastructure Development Fund in 2013. MIDF provides the long term funding needed for infrastructure investments and helps to close the existing funding gap in the Western Balkans, including in Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia.

 

3. What types of investments does MIDF support?

MIDF indirectly provides financing for the construction of new infrastructure, or rehabilitation or improvement of existing infrastructure, such as

  • water supply and treatment, wastewater treatment and sewerage,
  • solid waste management, recycling stations, sorting facilities, composting plants or other waste treatment facilities,
  • energy and heat supply, e.g. heating systems, including networks, boiler houses, central and individual heating sub-stations,
  • public roads, public parking, traffic management / signalling, bus stations, street lighting, green parks, and pedestrian areas,
  • public sector energy efficiency and public buildings, and
  • public transport infrastructure and rolling stock.

Other municipal infrastructure projects as approved on a case-by-case basis.

 

4. Who may benefit from MIDF’s investments?

The beneficiaries of MIDF’s investments include:

  • municipal and regional governments,
  • entities or companies owned by municipalities
  • other public institutions owning or operating municipal infrastructure, and
  • private sector operators involved in the provision of municipal services.

 

5. What types of credit instruments does MIDF offer to participating banks?

MIDF offers three types of credit instruments:

  • Credit lines – MIDF provides additional liquidity to participating banks at market terms. In turn, participating banks can expand their own lending to beneficiaries.
  • Funded risk participation – MIDF provides an agreed portion of the funding to the participating bank to co-finance an eligible investment and bears a pro rata share of the repayment risk.
  • Unfunded risk participation – MIDF guarantees an agreed share of the funding provided by the participating bank and shares potential losses pro rata in case of a default by the beneficiary.

 

6. What types of technical assistance does MIDF provide?

  • Technical assistance to participating banks: MIDF supports participating banks in developing sound financing structures for municipal infrastructure investments. This notably includes the establishment of internal systems and methodologies for municipal and infrastructure risk assessment, drafting of finance document templates, social and environmental due diligence preparation, procurement and concession monitoring.
  • Technical assistance to beneficiaries:  Technical assistance supports MIDF’s beneficiaries to increase their administrative and technical capacity throughout the project development and implementation cycle. This notably includes the preparation of feasibility studies, project designs, tender documents, procurement and concession reviews, and project monitoring and reporting.