Financial Instruments

Financial Instruments (FIs) are special-purpose financing schemes co-financed with resources from the European Structural and Investment Funds (ESIF), national financing from the Operational Programmes (OPs) and with additionally raised resources from the private and the public sector. FIs aim to achieve more efficient use of public resources, as compared to grant funding and to extend financial support to target groups of final recipients implementing economically viable projects, thus contributing to overcoming identified market inefficiencies, and to the implementation of EU’s strategic goals and policies.

Financial instruments were first used in Bulgaria during the previous programming period, 2007-2013, by implementing the JESSICA initiative for urban development and the JEREMIE initiative for SME financing.

Financial instruments are expected to play an even greater role in the EU Cohesion Policy in the 2014-2020 programming period and an increasing portion of the EU budget will be earmarked for FIs in the future.

FI Management Structure

Resources made available to Bulgaria from the ESIF are managed by the Managing Authority (MA) of the respective Operational Programme,responsible for the implementation of the policies of the Programme.

The Managing Authority signs a Financial Agreement with FMFIB for the management of the resources allocated to FIs in the respective Operational Programme.

FMFIB manages the financial resources intended for FIs via a Fund of Funds by making the resources available to the potential financial intermediaries (including credit and financial institutions, fund managers, etc.) selected by FMFIB in open and transparent procedures in compliance with the EU regulations and the established market practices.

The selected financial intermediaries complement the respective instrument with private resources and make the financing available to eligible final recipients in the form of loans, equity or quasi-equity financing.

The FI implementation and management strategies are based on an Ex-Ante Assessment done using a common EU methodology which evaluates the gap between the demand for and the supply of financial products and establishes the size and type of FIs, taking into account the development goals set out in the respective Operational Programme.

The use of the FI resources and the completion of the targets laid out in the Operational Programmes are monitored and controlled at all levels, i.e. at the level of the Programme, the Fund of Funds, the instrument, the financial intermediary and the final recipient, and are subject to audit by the relevant authorities at the national and the European level.

Key Advantages of Financial Instruments

Overcoming Market Inefficiencies

  • Financial Instruments provide financing to target groups of final recipients that have limited access to financing from the private sector. Such financing would generate a positive effect through the support provided to the final recipients and will contribute to the goals of the respective Operational Programme.
  • The financial products supplied by means of FIs are tailored to the needs and requirements of the target final recipients and offer, in general, more favourable terms, including with respect to pricing, maturity and/or collateral requirements.

Leverage Effect

  • In addition to the resources from the Operational Programmes, FIs mobilise additional private financing which increases the total amount of the support available to the final recipients.

Revolving Funds

  • Resources paid back by the financed projects, and the potential other revenue generated from them, can be reused to provide support to other eligible final recipients and projects.

Fiscal Discipline

  • The resources made available via the instruments require that the final recipients pay them back, which leads to a more efficient use of public resources compared to grant support, and reduces the chances that final recipients may grow addicted to public support.


  • Final recipients can benefit from the expertise of the financial intermediaries and other private sector partners in structuring economically viable projects.