The European Investment Bank (EIB) is lending EUR 190 million (1) for the modernisation of the rail network in Hungary. The funds will mainly help modernise three rail lines emanating from Budapest that lie on the pan-European rail corridors IV and V and which link Hungary to Austria (Corridor IV), Romania (Corridor IV) and Slovenia (Corridor V) as well as the Budapest-Lvov (Ukraine) line. Of the total amount, EUR 60 million are lent directly to MAV, which is the operator of the national railway system and the remaining EUR 130 million will be channelled to MAV via the Government, the owner of the railway infrastructure.

Works mostly comprise track rehabilitation, improvements to the power supply systems and signalling equipment as well as the redesign and upgrading of stations. Investments will allow higher speeds for international and national freight and passenger traffic, in line with the objectives of Hungary's Accession partnership. The EIB is co-financing the investments with ISPA, the EU's special grant aid programme for furthering transport and environmental schemes in the Accession Countries.

The loan agreements were signed today during a visit to Budapest by EIB"s Director-General Terence Brown, who commented on the Bank's activities in Hungary: 'Since 1990, when the EIB started lending to projects in Hungary, it has sought to further social and economic integration with the EU. Initially the Bank concentrated on public infrastructure - roads, the railways, air traffic and the telecommunications network. A well-developed communications network built to EU standards indeed is the key to the economic expansion and EU-integration. An efficient railway network in particular helps maintain a healthy balance between collective and individual transport and to limit the environmental impact. More recently the EIB shifted its attention to public services like water and sewage schemes as well as power and gas distribution. Now the EIB is also offering suitable long-term financing to health and education projects. Moreover, EIB's partner banks in Hungary have channelled EIB funds to some 400 Hungarian small and medium-size enterprises (SMEs), more than in any other candidate country.'

The EIB is the European Union's long-term financing arm and is steadily increasing its lending in the Central European countries preparing for EU accession. The loans signed today bring total EIB lending to private and public sector projects in Hungary since 1990 to EUR 1.9 billion. Recently the EIB and the Hungarian Government signed a Memorandum on Cooperation, which fixed the annual volume of favourable long-term EIB loans to public sector projects in Hungary at EUR 300 million. This amount is earmarked for financing up to 50% of the investment costs of eligible projects included in Hungary's multi-annual sector programmes.

(1) 1 EUR = 0,6235 GBP