The Ministry of Finance Introduces Social State Bonds to Help Finance Healthcare, Education, and Social Inclusion Projects
The Ministry of Finance of the Czech Republic today announced the launch of the country´s inaugural Social Finance Framework, a major step toward aligning state bond issuance with international ESG standards and meeting demand from socially responsible investors. The new framework is designed to ensure that net proceeds from social state bonds are allocated exclusively to eligible social expenditures within the state budget. These funds will support the Czech Republic’s long-term priorities, including social inclusion, access to essential services, and recovery from natural disasters.
Under the framework, proceeds from social state bonds can only be used to finance or refinance:
- Access to essential services: healthcare;
- Access to essential services: education and vocational training;
- Socioeconomic advancement and empowerment: social inclusion; and
- Affordable basic infrastructure.
The latter two categories also encompass eligible flood-related social expenditures of the state budget. The Social Finance Framework further defines the governance process for selecting social expenditures, as well as for monitoring and post-issuance reporting.
The launch of this framework represents an important milestone for the Czech Republic.
Zbyněk Stanjura
Minister of Finance“The launch of this framework represents an important milestone for the Czech Republic,” said minister of finance Zbyněk Stanjura. “This step will contribute to supporting the sustainable development of our country, ensure the measurable impact of social program financing, and at the same time expand the range of available government debt financing instruments with a new type of bonds.”
The Social Finance Framework has received a Second Party Opinion from Sustainalytics, confirming alignment with the most recent Social Bond Principles (SBP) of the International Capital Market Association (ICMA) and the Social Loan Principles (SLP) of the Loan Market Association (LMA). Sustainalytics assessed the framework as making a “Significant” contribution to the country’s sustainability goals, while the most important of the four expenditure areas of the framework, Social Inclusion, received the highest possible rating of “Strong”.
The framework also establishes robust governance for selecting eligible expenditures, monitoring progress, and reporting to investors on the use of proceeds and social impact.
The Ministry of Labour and Social Affairs, the Ministry of Education, Youth and Sports, the Ministry of Health, the Ministry of Agriculture, and the Ministry of Transport cooperated with the Ministry of Finance in preparing the framework.
Raiffeisen Bank International AG acted as sole Sustainability Coordinator.