The European Investment Bank (EIB), the European Union's long-term financing institution, and the Democratic Socialist Republic of Sri Lanka concluded the Framework Agreement under which the Bank may start financing capital investment in Sri Lanka.

The Framework Agreement was signed in the presence of Mr. Romano Prodi, President of the European Commission, and of Ms. Chandrika Bandaranaike Kumaratunga, President of Sri Lanka, by Mr. Philippe Maystadt, President of the EIB, and Mr. Chrysantha Romesh Jayasinghe, Head of Mission of Sri Lanka to the European Communities.

The EIB finances capital investment in countries which have co-operation agreements with the European Union. In Asia the Bank has so far concluded framework agreements with Bangladesh, China, India, Indonesia, Mongolia, Pakistan, the Philippines, Thailand, Vietnam and Yemen.

Following an invitation from the European Council of Ministers, the EIB's Board of Governors authorised lending up to EUR 750 million, over a period of three years (1993-1996), for projects of mutual interest located in Asian and Latin American countries (ALA). On February 1997 EIB's Board of Governors approved a new lending facility for projects in ALA countries of EUR 275 million to be used by the end of June 1997. The Board of Governors approved a lending facility of EUR 900 million for projects in ALA countries during 1997-1999 on June 1997. The current lending facility of EUR 2 480 million is for the period 2000 - 2007.

Under these authorisations the EIB has already provided EUR 836 million for projects in Asia.

The EIB was set up in 1958 under the Treaty of Rome to provide loan finance for capital investment furthering European Union policy objectives, in particular regional development, Trans-European Networks of transport, telecommunications and energy, international competitiveness of industry, environment improvement and protection, health and education. Outside the Union, the EIB contributes to European development co-operation policy in accordance with the terms and conditions laid down in the various agreements linking the Union to some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.