What is Credit Fund?

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What is Credit Fund?

Ministry of Agriculture has established Credit Fund in order to improve competitive ability of the agricultural sector, to accelerate the assimilation of the Rural Development Programme (RDP) funds, and to create more favourable financing opportunities for business development. Credit Fund, which has been established in accordance with the RDP regulations, shall create an access for agricultural entities to the financing of the European Agricultural Fund for Rural Development (EAFRD) and to preferential credits for their business development.

Legal regulation

By the Order No. 3D-525 of 17th July 2009, Minister of Agriculture of the Republic of Lithuania has assigned Rural Credit Guarantee Fund to carry out the administrative functions of the Credit Fund, which shall operate in accordance with the regulations No. 1974/2006 and No. 1698/2005 of the European Commission and the regulations for the administration of the financial engineering measures enacted by the Minister of Agriculture of the Republic of Lithuania by the Order No. 3D-503 of 14th July 2009. Credit Fund was established as a separate block of finance within the AgriculturalCredit Guarantee Fund.

In order to finance and implement financial engineering measures, the contract was signed on 3 August, 2009 by three institutions: namely, the Ministry of Agriculture, the institution assigned for the RDP measures management, the National Paying Agency, which administrates the RDP measures, and the Agricultural Credit Guarantee Fund, which administrates the Credit Fund.

Budget of the Credit Fund

Total budget of the Credit Fund amounted to181 million LTL and is comprised of finances from the European Agricultural Fund for Rural Development and from national budget (75 and 25 percent respectively). 

Main Activities

After receiving the funds through the National Paying Agency, Agricultural Credit Guarantee Fund shall perform the selection of banks that will receive objective credits in order to grant preferential credits to agricultural entities in accordance with the RDP measures.

Interest rates of the preferential credits shall be lower compared to those in the credit market at that date.

Finances of the Credit Fund shall be used to support the credits granted in accordance with two RDP measures of the Axis 1 “Improving the competitiveness of the agricultural and forestry sector”:

  • “Modernization of agricultural holdings”;
  • “Processing of agricultural products and increasing of added value”. Eligibility criteria for the potential credit beneficiaries shall remain the same as the ones applied for the RDP measures.

Preferential credits will only be granted for the implementation of the investment projects and not for the increase of working capital.

Credit Fund has been established for an unlimited period of time, yet it cannot be dissolved before the implementation of the RDP is finished, i.e. before 31 December 2015. After the year 2015, the administrator of the Credit Fund shall not sign new contracts with financial intermediaries. Activities of the Credit Fund shall be restricted to the administration of credit repayment.

Currently, the granting of preferential credits has expired.