Urban Development Funds (UDF) 2014-2020

Urban Development Funds (UDF) are a financial instrument under the Operational Program Regions in Growth (OPRG) 2014-2020 that build further on the UDFs created under the JESSICA initiative in the programming period 2007-2013. The main objective of the Urban Development Funds is attracting of additional private resource to the public resource, provided by the Operational programme “Regions in Growth” 2014 - 2020 through the Fund Manager of the Financial Instruments in Bulgaria (FMFIB), for financing of eligible urban projects and implementing the aims of the EU Regional policy.

"Sustainable cities fund" has been awarded the implementation of the functions of an UDF for the regions of Sofia and Southern Bulgaria via a public procurement procedure, held by FMFIB in August 2018. The total financial resource available through the Fund is BGN 342.37 m of which BGN 202 mare the financial resource provided by the Operational programme, while BGN 140.3 m or 41% of the provided resource are the private co-financing from the Partners in Sustainable cities fund – United Bulgarian Bank and Fund for local authorities and governments (FLAG). "Sustainable cities fund" offers loans with built-in guarantees aimed at a wide range of potential final beneficiaries in the field of urban development and cultural heritage. The guarantee coverage amounts to total of BGN 20.9 million: BGN 8.2 million for Sofia and BGN 12.7 million for South Bulgaria and is provided by OPRD through FMFIB.

What are the financial instruments’ advantages?

The funds, provided by the European Structural and Investment Funds are significant but insufficient to meet the ambitious goals of Cohesion Policy. The financial instruments aim to make more effective use of public resources than grants for the realization of socially significant and economically viable projects with insufficient returns to be funded by the free banking market. The financial instruments target certain market inefficiencies and are in line with EU strategic objectives and policies.


  • attract additional resources to the public in order to invest more funds in major urban projects;
  • stimulate credit and financial institutions to participate in public policies;
  • support entrepreneurship and encourage the inclusion of revenue-generating activities in potential urban projects;
  • promote more active involvement of different economic actors in urban development and provide support from EU funds;
  • support the implementation of financially viable and projects and investments;
  • ensure long-term project sustainability through long-term investment loans;
  • multiply the effect by recycling the funds in other projects;

What are the differences with the JESSICA 2007-2013 initiative?

  • More resource - five times more funds dedicated to FIs by Operational Programme „Regions in growth“ - BGN 202 m for the regions Sofia and Southern Bulgaria. SCF has provided co-financing amounting to 41% by the Fund – or BGN 140,3 m.
  • Extended scope – eligible projects are either under Priority Axis 1 “Sustainable and Integrated Urban Development” (PA1) or under Priority Axis 6 “Regional Tourism” (PA6). Under PA1 as new project activities are included energy efficiency measures in one- family residential buildings and student dormitories, but projects for health and educational infrastructure are not eligible for 2014-2020 period.
  • Extended geographical coverage - 39 eligible cities for urban development and the territory of the whole of Bulgaria for tourism and cultural heritage. SCF funds 22 of 39 cities and 14 regions for tourism and cultural heritage projects.
  • More preferential conditions - a built-in guarantee, which financial advantage is fully transferred to the final recipient by means of interest rate and collateral reductions.
  • Combination with grants –combination of support between a financial instrument and Grant is envisaged as a possibility for projects for cultural infrastructure and energy efficiency projects for university dormitories under Operational Axis 1 as well as for tourism and cultural heritage projects under Operational Axis 6, if the project promoter is eligible for funding under the respective Operational programme „Regions in growth“ 2014-2020 scheme.