The Fund for Local Authorities and Governments (FLAG) signed an agreement with the European Bank for Reconstruction and Development (EBRD) for a 15-year loan of EUR 35mn with a grace period of 3 years. FLAG signed another agreement with the country’s largest lender UniCredit Bulbank, which was selected for managing bank of the fund. UniCredit Bulbank has agreed also to participate in a syndicated loan, organised by EBRD. FLAG is expected to start operation on January 15 with initial capital of BGN 150mn (EUR 76.7mn), which will increase to BGN 250mn by the middle of the year. The state has already allocated BGN 30mn to the fund so far and has earmarked BGN 50mn in the law budget for next year. FLAG will provide financing to municipalities to support utilisation of EU funds with respect to national co-financing, VAT payments, and project preparation. FLAG is expected to sign credit agreement with the World Bank as well.