ILTE plans to inject EUR 6 billion into the Lithuanian economy by 2029
National Development Bank ILTE is entering a new phase of its operations and plans to inject EUR 6 billion into the Lithuanian economy over the next four years, half of which will come from private investors – international financial institutions – bonds and other means.
„ILTE will become a development bank, thus complementing the financial market and acting where commercial banks lack financing“, – Finance Minister Kristupas Vaitiekūnas told reporters on Monday.
„We expect that within four years ILTE will help mobilise and inject around 6 billion euros into the Lithuanian economy“, – he said.
This is about one and a half times larger than the European Recovery and Resilience Facility (RRF), which ends in autumn this year, and which is expected to mobilise a total of around €3.8 billion for Lithuania.
The new funding would generate around 1.5% of the country's Gross Domestic Product (GDP) annually.
Under the new operational strategy, ILTE foresees four main areas of funding – strengthening the defence industry, security and energy independence, investment in competitive, innovative business sectors, including agriculture, social and strategic infrastructure, especially in municipalities, and renewable energy.
The Minister of Finance said that these strategic areas are currently the main areas where funding is particularly scarce.
The new phase of project financing as a bank ILTE plans to start in May, when the first contracts will be concluded – in other words, from then on, the bank will start to finance projects with its own capital, as well as co-financing projects with international financial institutions.
The structure of ILTE's portfolio in 2028 is expected to be as follows: 29% each of defence and infrastructure and investment financing, 28% of – investment in building modernisation, renovation of multi-family housing, 13% of – working capital financing.
In total, around €1 billion is planned to be invested in defence and infrastructure projects.
According to Dainius Vilčinskas, CEO of ILTE, the Development Bank plays a significant role in the market, and last year alone it financed €1.2 billion of projects.
„ILTE acts as a development bank in Lithuania, financing those sectors of the economy where there are market failures. Last year was a breakthrough year for ILTE – financing was provided for an amount almost three times higher than in 2024“, – D. Vilčinskas told journalists.
According to him, ILTE's financing is provided through direct loans and guarantees.
The Ministry of Finance, which manages ILTE, estimates that there is currently a funding gap of around €20 billion in the domestic market.
In other words, the ILTE will operate in a market environment, but more as a macro-economic instrument to finance riskier market sectors, including those that lack the contribution of commercial banks.
This also means that ILTE will not continue to provide day-to-day retail banking services, such as taking deposits from the public.
„ILTE does not intend to compete with private market players, ILTE (…) will be guided by the principles of growing the economy and creating more opportunities for both ILTE itself and private investors“, – said D. Vilčinskas.
He stressed that the new model of ILTE's operation will not aim to create „artificial competition“ in the market.
The creation of the ILTE HUB, a consultancy centre, is also on the horizon, helping to translate funding ideas into concrete projects and finding sources of funding for them. In this way, ILTE plans to attract up to 15 projects per year, for a total of around €0.5 billion in funding and a further €550 million in third-party guarantees per year.
„This model is also adopted from the European Investment Bank, which also has a practice of assisting applicants (in the form of an application for funding – ELTA), which is just another example of ILTE being an institution built to the highest European standards“, – said K. Vaitiekūnas.More representatives of international financial institutions on ILTE board
The governance model of ILTE is also being changed to be more in line with the banking governance structure and recommendations of international supervisors.ILTE, like other banks operating in the country, will be supervised by the Bank of Lithuania (BoL).
„Security and transparency measures are currently being finalised“, – said the Finance Minister.
Supervisory and anti-money laundering control mechanisms are also being strengthened – the number of members of the Supervisory Board will be increased from 7 to 9 with the inclusion of representatives of international financial institutions, new Board committees – Audit, Risk Management, Remuneration and Appointments will be established, and agreements have been concluded with the Financial Crime Investigation Service (FCIS) and the Office of Special Investigations (OSA).
The new structure of ILTE is being developed with the involvement of International Financial Institutions (IFIs) such as the European Investment Bank (EIB), the Nordic Investment Bank (NIB) and the European Bank for Reconstruction and Development (EBRD).The new ILTE supervision model is expected to come into force in 2027, following the adoption of a law in the Parliament.
In order to increase ILTE's financing capacity, the Government has already decided to increase the Bank's authorised capital by €412 million in 2026–2028 to more than €765.4 million, with a three-fold increase in capital from 2024.
In December, ILTE also launched its first-ever €112 million green bond – the funds raised from investors will be used for the renovation of the country's apartment buildings.
For the first time in the Baltic States, a listed green bond has been issued, which has received the highest AAA credit rating from two international rating agencies („Fitch“ and „Scope“), and the credit rating for the issue is also ahead of the credit rating of the Lithuanian state (A+).
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