• The IFGC, promoted by the Ministry of Agriculture, Fisheries and Food, is being strengthened in view of EAFRD aid.
• The IFGC is currently offering flexibility to farmers during the COVID-19 pandemic.
• The RRN co-finances the software application that supports the agents who manage the grants.

Its creation is included in the National Rural Development Framework 2014-2020, approved by the European Commission in 2015, which provides for the creation of a financial instrument open to the participation of all autonomous communities that wish to participate. This instrument aims to pool contributions from participating RDPs under a single management and intermediation structure with financial institutions.

The IFGC is a financial guarantee instrument , with a capped portfolio guarantee structure, providing 80% credit risk coverage for each loan and a 20% portfolio cap. Thus, the IFGC would guarantee 80% of the risk on a loan-by-loan basis until the capped guarantee rate (20%) is reached, after which the financial intermediary (bank) would assume all the risk.

One of the characteristics of financial instruments is their repayable nature , since, unlike subsidies, these are aids that are repaid back to the Financial Instrument that previously provided them.

PAC 21-27 News

Financial instruments will gain greater importance under the new CAP, according to the draft regulation, which proposes a significant increase in their use. The new features include the following:

• Price volatility: Financial instruments' role in addressing falling agricultural prices caused by market, weather, health, and other conditions. Thus, financial instruments, in addition to continuing their mission to support viable investments, will provide liquidity , primarily in adverse situations. How? By providing working capital loans.
• Young people : In the next period, there will be a stronger emphasis on the priority targeting of financial instruments to young farmers. In this regard, the 10% limit on land purchases from the total eligible investment has been eliminated for young farmers who use financial instruments.
• Updating the ex-ante evaluation: Financial instruments must always be based on an ex-ante evaluation. The draft of the new EU regulation allows for the use of previous evaluations, updating them if necessary, so as not to have to conduct them from scratch.

From all these measures it is clear that Financial Instruments will alternate, along with subsidies, as the new essential support for rural development .

Computer application

The stakeholders jointly involved in managing the Centrally Managed Financial Instrument are the Ministry of Agriculture, Fisheries and Food ; the Autonomous Communities (which finance the IIFFs through their own free will and decide which measures and actions to implement); along with the banking institutions (currently 14) and SAECA (State Agricultural Guarantee Company).

The exchange of information, essential for proper management and monitoring, between all stakeholders is carried out through a software application developed by MAPA, which is included among the National Rural Network's activities co-financed by the EAFRD.

This application is periodically updated with changes in EU regulations.

The IFGC and COVID-19

The Centrally Managed Financial Instrument of Castile and León has included the possibility, provided by the Commission in response to the situation created by COVID-19, to grant loans exclusively for working capital, with the aim of providing liquidity to the owners of agri-food and forestry farms and industries. To access these loans, no justification is required before or after the owners obtain the loan.