The European Investment Bank (EIB), the European Union's long-term financing institution, is making available a global loan of ECU 50 million (1) to the Cyprus Development Bank (CDB) for the long term financing of projects by small and medium sized enterprises (SMEs) in the industrial, agro-industrial, tourism and service sectors.

This is the first EIB loan in Cyprus under the pre-accession facility concluded in 1998 which foresees additional EIB financing in candidate countries in Central and Eastern Europe and Cyprus by 2000. The EIB was mandated to lend an additional ECU 3.5 billion under the pre-accession lending facility in these countries, where the EIB's financing capacity will double between now and the year 2000. Lending will be aimed at projects in all the ten CEECs and Cyprus to integrate these countries with the EU and facilitate the adoption of the "acquis communautaire". A particular emphasis will be given to environmental protection, as well as communications infrastructure (including TENs), industrial competitiveness and regional development. Financing will continue to be carried out in close co-operation with the European Commission to maximise synergies between the MEDA and PHARE grant aid programmes and EIB loans, as well as with other banking institutions.

Commenting on the loan, EIB's Vice-President P.Gennimatas said: "The success of EIB global loans to CDB reflects the efforts being made by Cypriot enterprises to expand and modernise their activities and to restructure in order to improve their competitive position in preparation of accession to the European Union".

This loan is the fifth such line of credit to CDB, following the successful implementation of four previous global loans in the period 1991-1997 totalling ECU 77 million. The two most recent loans have been rapidly utilised to finance over 80 projects meeting a strong investment demand in the services and tourism sectors in Cyprus.

Established to foster economic development by promoting long-term lending and providing other services to the private sector, CDB is the main development finance company in Cyprus.

The European Investment Bank (EIB) is the European Union's long-term financing institution. Established in 1958 by the Treaty of Rome, it finances capital investment projects, which further EU policy objectives. It also participates in the implementation of EU co-operation policies towards third countries that have co-operation or association agreements with the Union.EIB lending outside the EU in 1997 amounted to ECU 3.2 billion, out of a total of ECU 26.2 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 finance in Cyprus is provided under the ECU 2.3 billion "Euro-Mediterranean lending facility" (1997-1999) designed to support investment in the area and the "pre-accession facility". In Cyprus, a total of some ECU 226 million has so far been advanced by the EIB over the past 19 years to support projects in water supply and waste water treatment, industry, energy and transport infrastructure.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30/09/1998, when ECU 1 = 338.120 GRD, 1.96 DEM, 0.79 GBP, 6.58 FRF, 1.17159 USD, 0.580568 CYP.