Uncertain future for Slovakia’s development funds

Dana Marekova

The Slovak government does not seem to understand the difference between export promotion and development aid, as it proposes to lump the two under one institution, Eximbanka SR

Despite the mounting concerns about blended finance, Slovakia’s export-credit agency (ECA) Eximbanka SR is about to join the club. The national parliament will vote on the new legislation in September, to take effect the following month. 

Experience shows, blended finance works best in middle income countries for “physical infrastructure” projects, and not so well – in truly vulnerable communities that urgently need development aid in the areas of health, education, and social justice.

Moreover, the involvement of the private sector in disbursement of development aid may add to developing countries’ debt vulnerability.

Delivering effective development aid through blended financing requires a particular development expertise, experience, and commitment, which is not at all Eximbanka SR’s focus.

Its primary role has always been to simply support Slovak businesses abroad without burdening public coffers, and some of its projects (e.g. crude oil financing in Cuba) are not just unaligned with the sustainable development mandate, but are in direct opposition to it.

In its new role, Eximbanka SR will be tasked with the implementation of blended finance mechanisms of the EU designed for development assistance and cooperation (External Investment plan, EIP, and European fund for sustainable development, EFSD), despite its sheer lack of experience of working with the primary target – vulnerable communities in low income countries.

It remains unclear how Eximbanka SR will be delivering on the development objectives while its own portfolio contains some heavy polluters in politically volatile countries with proliferating human rights abuses.

If Slovakia is serious about its commitment to the Sustainable Development Goals (SDGs) and the Paris agreement, it should think twice before burdening an unrelated institution – Eximbanka SR – with the mission it has never signed up for.

More on the issues of blended finance: https://www.counter-balance.org/wp-content/uploads/2019/07/NGO-submission-to-High-Level-Group_July2019_final.pdf