The European Fund for Southeast Europe (EFSE) has provided the equivalent of USD 5 million in Armenian dram to partner Inecobank. The senior loan will be used to increase the bank’s offer of long-term, local currency home financing for lower-income households. With the investment, the partners aim to contribute to economic recovery and individual stability after a difficult period in the country.

Inecobank, a longstanding EFSE partner, is an important lender to clients who may otherwise struggle to access financing appropriate to their needs, such as lower-income individuals and small businesses. The new EFSE loan will further strengthen the bank’s capacities to offer sustainable housing finance and contribute to improved living standards. By providing this financing in local currency, the partners aim to empower borrowers to invest in their future without the risk of exchange rate fluctuations that could negatively impact their cash flows.

EFSE Board Chairperson Klaus Müller said: “Local currency lending is a key component of responsible finance, as it protects unhedged borrowers from exchange rate risk. As an impact investment fund focussed on generating positive social benefits in the long term, EFSE is keen to advance the practice of local currency financing in the European Eastern Neighbourhood Region. That is why we are pleased to be furthering our relationship with Inecobank to extend resources to individuals and families while they bridge a turbulent period of pandemic and military escalations.”

Inecobank CEO Aren Naltakyan said: “We greatly value EFSE’s trust. Mortgage lending is one of the important products in Inecobank’s retail lending. Thanks to our long-time partner EFSE we are enhancing our offer of local currency mortgage product, which allows our customers to follow their dreams without worrying about fluctuations in the foreign exchange market. Through this effective cooperation, we believe that many families will be closer to becoming home-owners.”

EFSE’s ability to provide funding to its partners in local currency was boosted by generous contributions from the European Commission as part of its EU4Business initiative as well as from the German Federal Ministry for Economic Cooperation and Development (BMZ).