State to State Loan (SSL) combined with a commercial credit
Tied State-to-State loans (SSL) are granted by Belgium to developing countries to finance development projects carried out by Belgian companies. This mainly concerns Belgian infrastructure projects or Belgian projects for the export of equipment and associated services. Examples of sectors: water supply, anti-pollution projects, health care sector, etc.
State-to-State loans serve a dual objective: they support the development of the countries receiving the aid and the Belgian economy by stimulating major exports.
In order to offer a sufficient number of companies the opportunity to introduce a request, the amounts for State-to-State loans cannot exceed 10 million EUR.
Tied State-to-State loans are always combined with a commercial credit in order to comply with the OECD concessionality requirement of at least 35% and to maximise the contract amount.
The ratio between the State-to-State loan and the commercial credit is 2/3 SSL and 1/3 commercial credit
State-to-State loans are granted at very favourable conditions: the credit repayment period is 40 years including an 20-year grace period. The interest rate is 0%.
After the advance payment with the SSL, the other invoices are paid pro rata with the percentage of the State-to-State loan and that of the commercial credit.
As the recipient country will be responsible for the timely repayment of the State-to-State loan, Finexpo must receive from the highest government levels (the President, the Prime Minister, the Minister of Finance,…) of the country concerned a letter confirming the project priority.
Letter of priority
As the recipient country will in time have to pay back the State-to-State loan, Finexpo must receive from the country concerned a letter of priority confirming that the project has priority for its development. This letter of priority must come from the highest government levels of the developing country (President, Minister of Finance, Minister of the Budget, etc.).