The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a second loan of ECU 5 million (1) for the construction of further 60 km section of the highway linking the town and port of Alexandria with the towns of Ismailia, Port Said and the Sinai region, along the north-eastern coast of Egypt. The road is part of a transport corridor linking the Mediterranean countries from Morocco to Gaza/West Bank and other neighbouring countries.

A first loan of ECU 10 million for the highway was signed last year. Financing will be phased over project completion up to the year 2001.

The project, which is being carried out under the authority of the Central Development Organisation, an agency of the Ministry of Housing, Utilities and Urban Communities, will help reduce transit time, lower travel operating costs, reduce accidents and improve the possibilities for a more balanced development of the areas it serves. Road transport is the dominant mode of transport in Egypt; it is estimated that about 75% of all freight and two-thirds of all passenger traffic are carried by road. The project forms part of the Egyptian Authorities' program to equip the country with an efficient and well-maintained road network suited to modern traffic. The Northern Coastal Highway will be toll-free to encourage the utilisation of the road and boost the development of new activities along the coast. Works include a ring road around Alexandria and extension eastwards, as well as the construction of a bridge over a branch of the Nile. The investment attracts a 2% interest subsidy from the EU budget under the 4th EU-Egypt financial protocol.

An environmental impact study for the project is being funded through a METAP grant of ECU 124 000, provided by the EIB. A METAP regional office was established in Cairo last year, to develop institutional capacity and to prepare future environmental investment projects in co-operation with the national authorities of the Mediterranean countries concerned. In the last two years, the EIB has approved the preparation of 18 METAP studies for a total of ECU 4.7 million.

EIB is owned by the EU Member States. It is active mainly in the EU, but also provides funds in countries outside within the framework of the Union's external co-operation policies. The Bank is a major source of EU financial support for economic development in the region, where it has advanced more than ECU 3.5 billion since 1992 in 12 countries in the southern and eastern rims of the Mediterranean. Since 1992, the EIB has provided some ECU 700 million in Egypt.

METAP - the "Mediterranean Environmental Technical Assistance Program" was launched in 1990 and is designed to assist countries with a Mediterranean coastline to find solutions, at a national and regional level, to common environmental problems by developing policy options and mobilising grant resources. The programme is co-managed in partnership by the EIB, the World Bank, the European Commission and the UNDP. During the last six years, METAP has made an inventory of the environmental situation in the Mediterranean, helped the creation of ad hoc institutional frameworks and was involved in the preparation of feasibility studies for specific environmental investment projects. Since being set up, the EIB has contributed through METAP to the identification of ECU 1.35 billion in environmental protection projects, towards which the EIB has committed loans for ECU 370 million.Since 1990, METAP funds totalling more that ECU 31 million have supported almost 122 technical assistance schemes. Over 90% of these funds went to activities in countries on the southern and eastern rims of the Mediterranean.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 31.12.1997, when ECU 1 = GBP 0.67, USD 1.10, EGP 3.78.