Tied State to State loans

Tied State to State Loans (LSS) are granted by Belgium to developing countries to finance development projects carried out by Belgian companies. These are usually Belgian infrastructure projects or exports or the export of Belgian goods and related services such as water supply, sanitation works, health sector, etc.

The purpose of the government loans is twofold. On the one hand, they contribute to development in the beneficiary countries. On the other hand, they support the Belgian economy by promoting Belgian long-distance exports.

In order to give as many companies as possible the opportunity to apply, the amounts for State-to-State loans are limited to EUR 12 million.

State loans are granted on very advantageous terms. The interest rate is 2% and the grant element is 35%. The maximum amount of a pure government loan is 12 million euros.

The repayment period of a purely tied government loan is 30 years, including a grace period of 10 years.

Eligibility criteria for a tied State Loan

To grant a tied State Loan:

• the project must be a priority for the beneficiary country;
• the project may not be commercially viable;
• the project must be developmentally relevant;
• there must be competition;
• the project must have sufficient Belgian interest (40%).
   

Procedure

• The company submits an application to Finexpo.
• The Finexpo Committee gives advice.
• If the recommendation is positive, Finexpo submits the file to the Council of Ministers.
• If that file is approved, Finexpo will draw up a state-to-state loan agreement and power of attorney for signature.
• The commercial contract is signed by the company and the authorities of the beneficiary country, and the State Loan Agreement is signed by the authorities of the beneficiary country and the competent Belgian Ambassador.
• The National Bank of Belgium (NBB) opens a P account for the payment to the company. The NBB asks the beneficiary country to send a number of administrative documents, such as an irrevocable payment order and specimen signatures.
• The beneficiary country sends (via our embassy) the payment order and the specimen signatures of the persons authorised to sign the invoices "for approval" to the NBB.
• The project is being carried out. The company sends the invoices to Finexpo and the NBB pays them after approval by Finexpo.