The European Investment Bank (EIB), the European Union's long-term financing institution, is lending ECU 75 million (1) to the National Bank of Egypt (NBE) for onlending to EgyptAir, for modernising and expanding its medium haul fleet. The investment, which is part of the company's comprehensive modernisation programme started in mid 1980's, will contribute to providing the airline with the capacity required to meet the expected growth in demand. Together with the replacement of other similar aircraft, the total capacity of EgyptAir will increase by 5.3% up to 1998.

The loan documentation was signed by Ms A. Obolensky, EIB Vice-President, Mr Ahmed Abu-Backr, NBE, and Mr S. Refaat, EgyptAir Vice-Chairman for finance. It falls under the Euro-Med Partnership mandate of ECU 2 310 million for the period 1997-2000 for financing investment projects in the 12 non-EU Mediterranean countries which have cooperation and/or association agreements with the Union. The Framework Agreement governing EIB activities in Egypt under this mandate was signed by the Minister for Planning and International Cooperation, Mr Zafer Seliem El Beshry and Ms A. Obolensky on the 19th July 1997.

At the signature ceremony Ms A. Obolensky pointed out: " I am particularly happy to sign this loan for Egypt's national air carrier, for a project which, apart from improving the countries links with the rest of the world, has a positive environmental impact, by reducing noise and emissions. It represents in some way another contribution by the EIB towards protecting the environment. It is in line with our policy to assist actively safeguarding the environment in the Mediterranean region, as is our support for setting up recently a regional office here in Cairo, as part of the Mediterranean Environmental Technical Assistance Program (METAP), operated jointly by the EIB, the World Bank, the European Commission and UNIDO".

The project comprises the acquisition of 4 Airbus A321-200 medium range aircraft, plus the necessary ground equipment, initial spare parts provisioning, 3 spare engines and training. The project will contribute to the development of air traffic and economic relations between Egypt and the European Union, which in geographical terms is the company's most important single market, accounting for almost 40% of traffic.

Established in 1932, EgyptAir adopted its current name in 1971. It is currently operating a fleet of 39 aircraft, serving 76 cities in 49 countries, mainly in the EU, Middle East and Far East.

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 some ECU 3 billion.Since 1992 in 12 countries in the southern and eastern rims of the Mediterranean under two different schemes: bilateral Financial Protocols signed with most countries in the region, and under the "Horizontal Financial Co-operation" facility, which was part of the EU's Redirected Mediterranean policy, designed to support investment in the fields of energy, telecommunications and environment offering joint benefits for the EU and for the Mediterranean countries. The "Horizontal Facility" has been fully committed in favour of some 42 large-scale investment projects throughout the Mediterranean region.EIB lending outside the EU in 1996 amounted to ECU 2.3 billion, out of a total of ECU 23.2 billion. The Bank lends in some 120 countries having association or co-operation agreements with the EU: African, Caribbean and Pacific (ACP) countries signatories of the Lomé IV Convention; Mediterranean, Central and Eastern European, Asian and Latin American countries.EIB organised in 1996 in Madrid a two-day Forum on "The Mediterranean: Working in Partnership", for tackling major Mediterranean issues and ways of furthering regional co-operation. Topics considered included: the European Union's Mediterranean policy and the EIB's contribution; the environmental challenges and ways of preserving a common heritage the strengthening of regional links; particularly through transnational infrastructure schemes; and the role of the region's banking sector in the form of a North-South partnership. It was attended by some 300 participants from 25 countries and international organisations.The Mediterranean Environmental Technical Assistance Program (METAP), was launched in 1990 with the aim to assist, at a national and regional level, countries with a Mediterranean coastline to find solutions to common environmental problems by developing policy options and mobilising grant resources. The programme is co-managed by the EIB, the World Bank, the European Commission and the United Nations Development Program (UNDP). Its regional office in Cairo established recently will help to prepare future investment projects in cooperation with national authorities of the countries concerned.Since 1992, the EIB has provided ECU 635.5 million in Egypt, both under the Fourth EU-Egypt Financial Protocol (1992-1996) and the "Horizontal Facility". The Protocol provided for Egypt ECU 310 million in EIB loans and ECU 16 million on risk capital financing.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30/6/1997, when ECU 1 = 0.68 GBP, 6.64 FRF, 1.13 USD, 0.75 IEP,3.93290 EGP.