EBRD and European Union launch portfolio risk sharing facility to boost MSME lending in Western Balkans

The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) have jointly launched a new Portfolio Risk Sharing (PRS) facility to enhance access to finance for MSMEs in Montenegro. 

The launch event, held in Podgorica, is a significant step toward supporting inclusive private-sector growth across the Western Balkans.

Aleksandra Vukosavljević, EBRD Director for Financial Institutions for the Western Balkans and Eastern Europe, said, “This EU supported facility marks an important step in expanding access to finance for underserved businesses in Montenegro.” 

“By sharing risk and combining innovative financial instruments with targeted technical assistance, we are enabling more small businesses to invest, grow and strengthen their contribution to the economy.” 

Co-funding and strategic objectives

The PRS facility is co-funded by the EU through its European Fund for Sustainable Development Plus (EFSD+) guarantee programme. 

This partnership shows a shared commitment to fostering economic development by unlocking financing opportunities for underserved business segments.

Under the facility, the EBRD provides local financial institutions with an unfunded risk-sharing guarantee covering up to 50% of the credit risk on new loans extended to MSMEs. 

By sharing this risk, the facility aims to lower barriers to lending for enterprises that often face challenges in accessing finance, such as insufficient collateral or limited operating histories.

While the facility was officially launched in Montenegro, it is part of a broader rollout across other Western Balkan countries. In Montenegro, the PRS facility is currently available through Crnogorska komercijalna banka (CKB), facilitating immediate impact on local MSMEs.

Regulatory recognition and capital relief

The Central Bank of Montenegro has recognised the PRS as an unfunded credit protection instrument, which provides capital relief to banks for the portion of exposure secured by the EBRD guarantee. 

This regulatory endorsement enhances the facility’s effectiveness in encouraging banks to increase lending to MSMEs.

Valentina Di Sebastiano, Programme Manager at the EU Delegation to Montenegro, said,
“The EU is keen to support the development of the private sector, in view of Montenegro’s planned accession to the EU and integration into the EU single market. A vibrant private sector will ensure that Montenegro can take full advantage of the opportunities linked to accessing the EU single market of more than 450 million people.” 

“In this context, it is fundamental that MSMEs can have the financial means to adapt and grow. By providing the full strength of the guarantee of the EU resources, the EU will help local banks to more effectively support local companies, notably in riskier and more innovative sectors.”

Targeting underserved business segments

The PRS facility is designed to promote more inclusive and balanced economic growth by specifically targeting underserved segments of the business community.

These include women-led and youth-led enterprises, as well as MSMEs operating in rural areas, which traditionally face greater difficulties in securing financing.

By strengthening banks’ capacity to lend using their own resources, the initiative also supports greater resilience within Montenegro’s financial sector, thereby unlocking new financing avenues for the private sector.

In addition to the risk-sharing guarantee, the facility benefits from EU-funded technical assistance and a first-loss counter-guarantee provided under the EFSD+. These complementary measures enhance the facility’s capacity to mitigate risks and support sustainable lending practices.