The European Investment Bank, the European Union's financing arm, is providing an ECU 110 million loan (1) to Isuzu Motors Polska Sp. for a new Diesel engine plant in Upper Silesia. The loan will be guaranteed by Dai-Ichi Kangyo Bank, Limited.

Located in the Katowice area, the plant will provide 600 jobs and contribute to the restructuring of the former coal- and steel-dominated economy of south-western Poland. It will largely use components supplied by European firms and the engines will mainly go to GM-Opel car assemblies in several EU countries, substituting imports from Japan.

The loan for the diesel engine plant brings total EIB lending in Poland since 1990 to nearly ECU 1.9 billion. Previous EIB financing concerned mainly the modernisation and expansion of gas, telecommunications, railway and motorway networks, the modernisation of Warsaw airport, municipal investments in Warsaw and Katowice, as well a re-forestation scheme. The EIB is also assisting the development of small and medium-size enterprises through its global loans (credit lines) to a dozen Polish and EU banks in Poland.

Commenting on the loan, EIB Vice President Wolfgang Roth said: 'The new diesel engine plant in the Katowice region will help Upper Silesia enhance its restructuring process started several years ago, with the aim of gradually absorbing surplus labour from the old industries such as coal-mining and metallurgy. The choice of this location by a well-known components manufacturer might well encourage other companies in the automobile sector to set up shop in this region.'

The EIB has advanced some ECU 6.6 billion for investment projects in eleven central and Eastern European countries since 1990. Under mandates from its Board of Governors for the years 1998 and 1999, the Bank will lend an additional ECU 5.5 billion, partly in the form of a Pre-Accession Facility, to help the countries in the region prepare for EU membership.

(1) On 31 March 1998, 1 ECU = DEM 1.99, USD 1.076; GBP 0.64; PLN 3.710.