The European Investment Bank (EIB) is lending a total of EUR 350 million (1) for private sector support across the country and for earthquake reconstruction in the regions devastated by the disaster of August 1999.
The documentation will be signed in the framework of the 2nd meeting of the Policy Dialogue and Coordination Committee (PDCC) of the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP), which will take place in Istanbul on 3 April 2003. The EIB funds are provided as follows:
EUR 200 million, in the form of global loans, will initially be channeled through the EIB's well-established Turkish partner banks, the Industrial Development Bank of Turkey (TSKB) and the Turkiye Vakiflar Bankasi (Vakifbank) to small and medium-sized enterprises (SMEs) in the areas of industry, services and tourism. Other Turkish partner banks may be added in due course.
This global loan, a follow up to the EIB's previous industrial sector global loan of EUR 125 million signed in 2001, aims at serving the private sector's long-term financing needs which, based on the success of the EIB's recent global loan facilities in Turkey, is clearly much needed. It underlines the continuing commitment of the EIB to assist in the long-term development of the country.
EUR 150 million goes to the Turkish Government to support priority rehabilitation and reconstruction works in the regions devastated by the earthquakes in Turkey in 1999.
This is the final tranche of a EUR 600 million EIB facility, the Turkish Earthquake Rehabilitation and Reconstruction Assistance (TERRA), approved in 1999 in support of EUR 1.5 billion reconstruction project established by the Turkish Government. The EIB participates in this project, in cooperation with other multilateral financing institutions, including World Bank and Council of Europe Development Bank.
It is used mainly for restoring housing and all essential economic and social infrastructure, including environment, transport, energy, health and education. It has also a particular focus on rehabilitating small businesses. The implementation of the works is carried out by the Project Implementation Unit (PIU), established within the Prime Minister's Office. PIU is responsible for procurement, implementation, monitoring and controlling financial flows of this reconstruction project.
With the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the EIB has reinforced its cooperation with the Mediterranean Partner Countries (MPC). Endowed with increased financial resources, FEMIP will enable the EIB gradually to scale up its annual lending activity in the region from EUR 1.5 billion to EUR 2 billion.
FEMIP accords priority to financing private-sector projects with the dual aim of liberalising the MPC economies and expanding their potential in the run-up to the EU-MPC Customs Union in 2010. In this connection, the EIB's objective is to bolster the proportion of financing it devotes to private-sector projects to 33%. It places emphasis on FDI and private sector activity, as well as on social-sector projects, particularly health, education and environmental protection, in the belief that this will make for social stability and encourage productive investment.
In Turkey, EIB has contributed todate with some EUR 2.5 billion towards projects of key importance for the Turkish economy, including a flagship FDI project for Toyota car manufacturing.
EIB finance for infrastructure went mainly for environmental projects and the earthquake reconstruction effort. Among the projects financed in Turkey are: the wastewater and effluent treatment systems in Bursa, Adana, Mersin, Diyarbakir, Izmit and Tarsus; the Urban Development Project for the city of Eskisehir, the desulphurisation equipment at the Yeniköy power station on the Aegean coast and the construction of more environment-friendly power and heating plants. The EIB has also promoted SMEs through global loans to local commercial banks.