With a total of EUR 320 million in South Eastern Europe in 2001, the European Investment Bank, the European Union's long-term financing institution, stepped up and diversified its financing in the region.

Having mainly supported the transportation sector since the beginning of its operations in South Eastern Europe in 1999 within the framework of the Stability Pact, in 2001 the EIB diversified its lending in the region with increased support to the private sector. This reflects the successful completion of the urgent reconstruction efforts, and the beginning of the stabilisation and economic development of the region.

In 2001, the EIB signed its first loan in the Federal Government of Yugoslavia. 70% of EIB's total lending in South Eastern Europe went to basic infrastructure, which is a key component in the development of the region. 21% went to the private sector with 4 new global loan operations in the FYR of Macedonia and Croatia for Small and Medium-sized investments by private sector companies and Municipalities. Global loans aim at serving existing private sector and small public infrastructure financing needs, and by associating renowned partner banks of the region, they contribute to the availability of long-term lending facilities domestically. They enrich the local banking systems by building up their technical and financial capacities, and thereby assist the long-term development of the country. The remaining 9 % went to the energy sector.

The following lending operations have been signed in 2001:

• Albania: A total of 47 million for modernising the transport and distribution of electricity (30 millions) and the rehabilitation of the port of Durrës (17 million).
• Bosnia and Herzegovina: 40 million for the modernisation of parts of the country's PanEuropean rail network.
• Croatia: A total of 146 million for the modernisation of the Vc PanEuropean rail corridor (40 million), rehabilitation of priority roads (60 million), and global loans to Hypovereinsbank Croatia, HBOR and Privredna Bank (a total of 46 million).
• FYROM: 20 million global loan to the government for channelling the funds through Stopanska Banka a.d. Skopje and Komercijalna Banca a.d. Skopje, to SMEs (more banks may be added in due course).
• Yugoslavia: A total of 66 million, of which 50 million to the Republic of Serbia and 16 million to the Republic of Montenegro for works in their territory, including rehabilitation of Belgrade airport, the Port of Bar, as well as urgent road works.

As indicated at the second regional conference of the Stability Pact for South Eastern Europe, held in Bucharest on 25-26 October 2001, the EIB will be in the coming years the main source of finance to support new investment in infrastructure in South Eastern Europe. The bank will provide loans for additional projects to upgrade and extend infrastructure in transport, energy and environment. The provisional list of some 30 projects was agreed by the infrastructure steering group (European Commission, EIB, World bank, European Bank for Reconstruction and Development, Council of Europe). The estimated total cost will be of EUR 2.4 billion, one third of which will be financed by the EIB. The Bank will be the lead financier in some 8 projects and will co-finance additional 5 projects.

The EIB will build on the successful completion of the Quick-Start Package of Infrastructure Projects and Studies decided at the First Regional Conference in March 2000. In this context the Bank was given leadership over 11 projects and 3 studies. The Bank has so far provided EUR 494 million for 9 projects and expects to close soon negotiations for the 2 remaining. In close coordination with the European Commission it has supported 2 regional studies on regional transport infrastructure and on regional air traffic infrastructure. A third study on environmental management will to be launched shortly.

Regional projects with financing plan secured or under finalisation
by Sector

The European Investment Bank finances capital investment projects which further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries. In South-East Europe, the EIB operates under the Mandate for Central and Eastern Europe agreed by the Council of Ministers. In the period 2000 to 2007the EIB will lend EUR 8.7 billion for investment in the region. The EIB plays an active role in the preparation of the reconstruction investment programme, in cooperation with the European Commission and the other multilateral financing institutions. The first group of infrastructure projects comprised 85 projects totalling EUR 4 billion. 35 projects are Quick-Start totalling EUR 1.1 billion. The EIB played a lead role in 14 projects, totalling some EUR 800 million.