The European Investment Bank (EIB), the European Union's financing institution, is lending ECU 200 million(1) in 3 tranches for the construction and equipment of a new metro line in Budapest. The new line will cross the Danube and link the capital's South Buda area with the central business district in Pest. It will connect with the existing metro network.

The loan is to BKV, the public transport company owned by the Municipality of Budapest. The loan is guaranteed by the Republic of Hungary.

BKV will use the EIB funds to build a first 7.3 km section comprising 10 stations and also to purchase trains capable of moving nearly half a million passengers a day. Kreditanstalt für Wiederaufbau (Germany) and the Nordic Investment Bank will be cofinancing the scheme along with the EIB.

At the loan signature, EIB-Vice President Wolfgang Roth said: "This is a crucial project that will help prevent a further shift from public to individual transport in Budapest. The provision of high quality public transport is a major factor contributing to a balanced and environmentally sound economic growth in the capital.'

The 3-tranche loan for the new metro line in Budapest brings total EIB financing in Hungary close to ECU 1.3 billion. Previous loans in the transport and communication sectors helped modernise the rail, road and telephone networks as well as the air traffic control system. In the energy sector, EIB supported electricity generation and distribution projects as well as petroleum refining and distribution. A number of small and medium-scale industrial and tourism ventures as well as municipal infrastructure and environmental projects were financed through EIB global loans (credit lines) made available to the Hungarian banking network.

Between 1990 and 1997 the EIB has made available ECU 6.3 billion in eleven Central and Eastern European countries: Albania, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Between 1998 and 2000, the EIB will provide a further ECU 5.5 billion in loans to the region, part of which is in the form of a special Pre-Accession Facility to give further help to the candidate countries in the region and Cyprus in their preparation for European Union membership.

(1) On 31 March 1998, 1 ECU = DEM 1.98; USD 1.10; GBP 0.67; HUF 224.707.