The European Investment Bank, the European Union's financing arm, is providing ECU 300 million (1) for flood damage repairs and for upgrading the telecommunications network:

  • ECU 200 million will go to the Konsolidac'ni Banka (KOB) for financing the government's programme to rebuild roads, railroads, flood protection and water schemes, as well as municipal infrastructure damaged in last Summer's floods in the north-eastern regions of the Czech Republic. The EIB funds will go to emergency work already underway or due to be started in the near future.
  • ECU 100 million to SPT TELECOM a.s. will help finance the company's ongoing investment programme covering the digitalisation of some 1.1 million telephone lines and the installation of 850 000 new lines.

During his visit to Prague, EIB Vice President Wolfgang Roth also signed guarantee agreements totalling ECU 240 million with the Czech Government for previous EIB loans granted for the upgrading of the Czech sections of the Vienna-Prague-Berlin railroad (75 million) and for the construction of the 62 km Pilsen-Rozvadov stretch of the D5-Prague-Nürnberg motor way (165 million).

Commenting on the new loans and the guarantee agreements, Mr. Roth said: 'Rehabilitation of infrastructure damaged during last Summer's floods is a top priority for the resumption of economic activity in this heavily industrialised region of the Czech Republic. The loan for upgrading the telecommunications network follows previous EIB financing of ECU 95 million granted for a first phase of SPT's long-term investment programme. It is another important step to bring telephone density in the Czech Republic closer to the EU average. The new loans, as well as the guarantees are part of a well established co-operation, under which the Czech Republic uses the EIB as its main source of external financing for major infrastructure projects.'

The loans signed today bring EIB lending since 1991 for projects in the Czech Republic to ECU 1.5 billion. Previous EIB loans mainly went to finance the modernisation and expansion of the Czech railway and motor way networks, improvements to a number of lignite-fired power stations to reduce flue gas emissions, the upgrading of the Skoda car factory, as well as a heat and power plant serving this factory and the city of Mlada Boleslav. The EIB is also assisting the development of small and medium-size enterprises through its global loans (credit lines) to the Czech banking sector.

The EIB has advanced some ECU 5.5 billion for investment projects in 11 central and Eastern European countries since 1990. Under a mandate covering the years 1997 to 2000, the Bank is lending another ECU 3.5 billion in this region. In addition to this, the EIB, at the request of the Council of Ministers, will also create a substantial pre-accession lending facility to support preparation of EU membership.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1997, when ECU 1 = GBP 0.69, IEP 0.76, USD 1.113, CZK 36.6244.