Fund for Local Authorities and Governments (FLAG)
Fund for local authorities and governments (FLAG) was established in March 2007 by the Council of Ministers with funding provided through the Bulgarian National Budget. FLAG is an instrument of the central government policy for regional development. Its aim is to provide financial assistance to municipalities for the absorption of as much funds as possible from the Structural Funds and the Cohesion Fund of the EU. The contribution of FLAG to the regional development involves coverage of as many municipalities as possible, located across the whole territory of the country, by creating conditions for maximum absorption of the funds from all operational programs under which the municipalities are beneficiaries.
The Fund is an institution of unique status, having no parallel not only in the Bulgarian financial and legal practice. The Fund is an independent legal entity having the status of a commercial company (joint stock company). It is structured as a revolving mechanism for financing the development and implementation of economically and financially viable projects in the area of municipal infrastructure and for supporting the administrative capacity of municipalities with a view to absorbing funds from the structural and cohesion funds. The Fund is designed as a financial mechanism to overcome the problem of ensuring cash funds to municipalities when they develop project proposals or finance approved projects in the framework of the Operational Programmes, co-financed by the EU funds.
FLAG provides loans only to Beneficiaries eligible for funding from the EU Funds and which are either:
municipalities or a group of municipalities in Bulgaria (for development of project proposals or for implementation of investment projects, approved by the Managing authority of the Operational programme), or
public entities operating in Bulgaria, owned or controlled by municipalities, local governments or local government agencies in the Republic of Bulgaria (only for implementation of investment projects, approved by the Managing authority of the Operational programme).
FLAG established a partnership with one of the most respectable commercial banks operating in the country – Unicredit Bulbank (Managing Bank). The bank’s role is to assist the Fund in assessing applicants’ creditworthiness and to administer the loan repayment. The risk of the projects is minimized by the evaluation carried out by the Managing Bank; afterwards, the Fund has adopted additional criteria that aim to reduce risks for the Fund itself and to ensure the prudent management of its portfolio.See more