The European Investment Bank (EIB), the European Union's long-term credit institution, is financing environmental and urban development projects in Budapest. An ECU 110 million (1) loan for 15 years to the Municipality of Budapest will be used for widening sections of the city's inner ring road, replacing obsolete tramcars, installing flue-gas treatment units at the incinerator, developing the city's sewerage system as well as improving parks, playgrounds and thermal baths.

The investments will relieve pressure on a number of infrastructure bottlenecks and improve the urban environment. The road improvements will help eliminate traffic congestion and pollution at critical points. The replacement of obsolete tramcars will raise the quality and convenience of public transport. The addition of flue-gas treatment units to the solid waste incinerator will help reduce emissions to levels satisfying EU environmental standards. The sewerage projects are part of a master plan to provide 100% wastewater treatment early next century. The improvements of the city parks and baths will improve living conditions in the capital.

This operation is among the first of a growing number of municipal environmental and infrastructure loans in Central and Eastern Europe. It follows an ECU 200 million loan in April 1998 to BKV, the public transport company owned by the Municipality of Budapest, for the construction and equipment of a new metro line in the capital. Like the tramcar replacement programme, the metro project will prevent a further shift from public to individual transport and contribute to an environmentally sound economic growth in Budapest.

The loan to the Municipality of Budapest and the ECU 30 M global loan in favour of K&H Bank also signed today bring total EIB financing in Hungary to some ECU 1.3 billion. Previous loans were for the upgrading of the rail, road and telephone networks, the above-mentioned new metro line as well as a modern air traffic control system. In the energy sector, the EIB helped modernise electricity generation and distribution as well as oil refining and distribution. A large number of small and medium-scale industrial and tourism ventures, as well as municipal infrastructure and environmental schemes were financed through several global loans to Hungarian banks.

Since it started lending in Central and Eastern Europe in 1990, the EIB has provided nearly 8.5 billion ECU for projects in the region, and more specifically in Poland (2.3 billion), the Czech Republic (1.8 billion), Hungary (1.3 billion), Romania (1.1 billion), Slovakia (665 million), Bulgaria (446 million), Slovenia (325 million), Lithuania (148 million), Estonia (88 million), Albania (68 million), FYR of Macedonia (70 million) and Latvia (61 million).

(1) Conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 31/09/1998, when 1 ECU = 1.96 DEM, 0.69 GBP,1.17159 USD, 256.4237 HUF.