During a visit to Belgrade today, Mr. Ewald Nowotny, Vice-President of the European Investment Bank (EIB) signed a EUR 90 million loan for urban renewal in Belgrade with the Minister for International Economic Relations, Mr. Lukovac, the Serbian Minister of Finance, Mr. Djelic and Mr. Bogdanovic, President of the Executive Board of the City of Belgrade.

The EIB funds are in support of an integrated programme for the reconstruction of tram tracks and major arteries of the Belgrade street network.

A healthy, efficiently operating capital city will be an essential part of Serbia's recovery from the problems of recent years. The improvement to the cities streets will ease congestion, reduce journey times and running costs for private car users, public transport users and operators alike. The refurbished trams running on renewed track will be able to run at full design capacity and will contribute to maintaining the relatively high proportion of the population using public transport. The project will also contribute to the improvement of the urban environment in Belgrade and to future economic development of the Region.

Commenting on this project, Vice-President Nowotny said: The finance contract we signed today represents the first EIB initiative to address the huge investment needs of municipalities in Serbia and - in the coming months- we will develop appropriate financial instruments to support municipal infrastructures and urban renewal projects in all Western Balkans Countries.

In the second half of 2003 in Serbia and Montenegro, we will concentrate on further infrastructure development in the road, rail sectors, with special focus on the improvement of the Pan European Corridor X (ex. Belgrade-Novi Sad Highway) as well as the core transport network of the Western Balkan Region. Some urgent investments in several Serbian Hospitals and Schools, the modernisation of the Air Traffic Control, are also under advanced preparation and-by the end of 2003- we plan to be able to mobilise a complementary total amount of about EUR 200 million of long term lending resources.

The EIB is a lead player in implementing the European Union's priority objectives. In 2002, EIB financing for projects supporting European Union policy objectives totalled EUR 39.6 billion. EUR 33.4 billion went to projects within the EU Member States and EUR 3.6 billion to those in the Accession Countries, while lending in other countries ran to EUR 2.6 billion. To fund these activities, the EIB borrowed EUR 38 billion on the world's capital markets.

In South-East Europe, the EIB operates under the Mandate for Central and Eastern Europe agreed by the Council of Ministers for 2000 to 2007, which provides for EIB lending of up to EUR 9.28 billion, which complements the EU, as well as EU Member States' own bilateral co-operation policies. To underline its commitment to future post-war reconstruction in the area, the EIB played an active role in the preparation phase of the reconstruction investment programme, in cooperation with the European Commission and the other multilateral financing institutions.

In 2002 in Serbia and Montenegro the EIB provided a total of EUR 270 million for transport, energy and SMEs: the rehabilitation of priority roads and motorways in Serbia (EUR 95 million), including 864 km road-sections along Pan-European Corridor X (from Croatia to FYROM with links towards Hungary and Bulgaria), sections on the trunk roads towards Romania, Bosnia-Herzegovina and Montenegro, and upgrading 29 road sections considered particularly dangerous in terms of road safety, for priority rehabilitation works on main railway lines between Belgrade, Podgorica and Bar (EUR 85 million), priority rehabilitation and upgrading of electricity infrastructure in the Republics of Serbia and Montenegro (EUR 70 million) and a global loan with the National Bank of Serbia (NBS) acting as agent, for financing investments by private sector SMEs and Municipalities, initially through Eksimbanka a.d. Beograd and Komercijalna Banka a.d. Beograd (EUR 20 million).