During his visit to Prague today, Mr. Wolfgang Roth, Vice-President of the European Investment Bank (EIB), Luxembourg, signed a loan with the Czech Minister of Finance, Mr. Bohuslav Sobotka, for EIB's participation in the financing of repairs of damages caused by the floods of August 2002.

EIB will lend a total of EUR 400 million to cover part of the State budget needs for rebuilding infrastructure damaged by the floods in the Czech Republic. The loan conditions are in line with EIB's support for the other Central European countries hit by the August 2002 floods and share the same special financial terms, including 30 years maturity and seven years grace period. The funds provided through the framework loan will be made available by Czech Government to various ministries and public entities for a number of reconstruction schemes falling under their responsibility.

The flood damages in the Czech Republic are estimated at some EUR 2.3 billion, or 3% of current Czech GDP. They affected 40% of the Czech territory, especially in the river basins of the Vltava (Moldau) and the Ohre/Elbe, in South, Central and Northern Bohemia. About 6% of the national territory was inundated, including large parts of the capital city Prague. The State budget is expected to cover about of EUR 1 billion (CZK 30 billion) or 43% of reconstruction costs and will concentrate on the rehabilitation of basic infrastructure.

Final beneficiaries of the EIB loan mainly include the Ministry of Agriculture, responsible for river management and water sector schemes, the Ministry of Transport, responsible for roads and railway reconstruction and the Municipality of Prague, in charge of the metro reconstruction, as well as the Ministry of Regional Development and the Ministry of Industry and Trade, respectively in charge of local roads and energy infrastructure. The Czech-Moravian Guarantee and Development Bank (CMZRB) will coordinate and oversee the implementation of the schemes with disbursements planned over three years (2003-2005).

Since the beginning of 2002, EIB has lent some EUR 900 million for projects in the Czech Republic. Nearly one third of total EIB lending in the ten Accession Countries in Central Europe during the current year went to projects in the Czech Republic. Projects financed were mostly in the transport, industry, environment and health and education sectors.

Commenting on EIB activity in the Czech Republic, Vice-President Roth said: 'The August 2002 floods will have long lasting effects on the Czech economy. The EIB reacted immediately after the catastrophe, helping to accelerate reconstruction. In line with the recent Copenhagen Summit decisions, EIB will continue to support public sector projects as well as foreign direct investment going to the Czech Republic. We are looking at several large priority infrastructure projects, particularly in the transport sector, which we plan to co-finance. Further development of the industrial sector, in particular through investments by EU companies, may benefit from suitable long term funding from the Bank. In the coming years, demand for EIB funds in the Czech Republic is therefore likely to grow further. In line with our long-standing experience in the present Member States, we will further broaden and deepen cooperation with the EU Commission to increase co-financing with the Cohesion and Structural Funds in the Accession countries."

The European Investment Bank (EIB), Luxembourg, is the European Union's house bank for financing long-term capital investment projects. While some 90% of EIB loans regularly go to projects in the EU - especially in its lesser developed regions - lending in the Accession Countries is growing fast and now reaches some 10 per cent of its overall loan volume. In addition to its main activities concentrated in the present and future EU Countries, EIB may also finance projects - although on a much more limited scale - in some 150 developing countries around the world which have cooperation agreements with the EU. EIB is the world's largest multilateral bank and raises on the capital markets most of the funds needed for its lending.