The European Investment Bank (EIB), the European Union's long-term financing institution, has just advanced two loans to the Galicia public authorities, one for 5 billion pesetas (ECU 30 million)(1) towards funding improvements to secondary education facilities and the other for 8.1 billion pesetas (ECU 48 million) in support of hospital infrastructure. Part of the loan for secondary education (2 billion pesetas) will attract a 2% interest-rate rebate under the European Economic Area Financial Mechanism(2).

The investment in the education sector will continue the work on bringing secondary education infrastructure up to the requirements set by the Education System Act, centring on extension and modernisation of existing schools so as to reduce class sizes, accommodate the increase in the number of pupils resulting from the raising of the minimum school leaving age from 14 to 16 years and cater for teaching of new subjects introduced under the Act and new professional training courses. It is estimated that this fresh investment will benefit some 160 schools throughout Galicia, with around 250 000 pupils in compulsory education.

The health sector infrastructure to be financed includes construction and equipping of one general hospital and three local hospitals, together with extension or rehabilitation of existing hospital buildings. These are all works provided for in the 1996-2002 investment programme designed to improve, expand and renovate Galicia's healthcare infrastructure.

EIB operations in the health and education sectors are a relatively recent innovation, introduced under the Amsterdam Special Action Programme (ASAP), initiated by the EIB at the request of the Amsterdam European Council of June 1997. To date, projects approved in these two sectors, under ASAP, amount to ECU 2.3 billion in all (around ESP 400 billion), including a number of schemes in Spain for a total of ESP 86 billion (ECU 520 million), relating to university infrastructure in Andalusia and the region of Valencia, as well as secondary education and health facilities in Galicia.

The EIB was founded in 1958 under the Treaty of Rome, which created the European Economic Community, with the aim of fostering integration, balanced development and economic and social cohesion in the Member States by providing long-term financing for capital investment furthering attainment of European Union objectives.The Resolution on Growth and Employment, adopted by the Amsterdam European Council in June 1997, invited the EIB to finance infrastructural schemes in the fields of health, education and urban renewal. Such investment is particularly helpful in fostering job creation, since the sectors in question tend to be labour intensive and projects of this type can generally be up and running within a relatively short space of time. The EIB set the Amsterdam Special Action Programme in train following the approval of its Board of Governors.Since Spain's accession to the EU in 1986, the EIB has provided aggregate financing of ESP 230 billion (ECU 1.5 billion) for projects in the Region of Galicia.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30/6/1998, when ECU 1 = 167.902 ESP,  0.66 GBP,  0.78 IEP, 1.09590 USD.

(2) The Financial Mechanism was set up by those Member Countries of the European Free Trade Association (EFTA) which joined the European Economic Area (EEA). In July 1993, an Agreement entered into force creating a free trade zone (the EEA) between the then 12 Member States of the European Union (EU) and 6 of the EFTA Member Countries (Austria, Finland, Iceland, Liechtenstein, Norway and Sweden), some of which had applied for accession to the EU. This Agreement also set up the Financial Mechanism, which was funded by contributions from the above 6 EFTA countries, in order to support - through interest-rate rebates on loans and/or grant aid - projects relating to environmental protection, transport, training and education in Greece, Ireland, Portugal and certain parts of Spain. All the grant aid available for Spain has already been committed.