The European Investment Bank (EIB), the Union's long-term financing institution, signed a EUR 22 million loan for energy in Serbia and Montenegro. The loan agreement has been signed today in Venice at the conference on The Balkans from reconstruction to economic integration chaired by Mr. Giulio Tremonti, Italian Minister of Economy and Finance.
The EIB's President Mr. Philippe Maystadt stated that the key focus of the Bank's activities over the next few years would be the extension and completion of the pan-European corridors throughout the region. The accent will be on connectivity, particularly on transport and energy infrastructure.
The EIB loan is a tangible example of EIB cooperation with the main international finance institutions and donors in their common effort towards reconstruction and development of the Western Balkans.
Mr. Gerlando Genuardi, EIB Vice-President responsible for the Balkans, declared the EIB is committed to playing a proactive role in the future development of the Balkan Countries. The Bank is following a coordinated regional strategy and applying the Enlargement Method in our relations.
Mr. Branko Lukovac, Minister of International Economic Relations of Serbia and Montenegro and Mr. Bozidar Djelic, Minister of Economy and Finance of Serbia signed the loan agreements.
EUR 22 million is for modernising high-priority needs of the existing power control system of Elektropriveda Srbije (Electric Power Industry of Serbia or EPS'), throughout the country. The project is complementary to the investments financed with a total of EUR 70 million by EIB in November 2002, for the priority rehabilitation and upgrading of electricity infrastructure. This EIB follow-up operation parallels lending from the European Bank for Reconstruction and Development (EBRD) and grant funding from the Swiss Government.
In 2002 the European Investment Bank stepped-up lending in the Western Balkans to a total of EUR 425 million (a 30% increase over EUR 320 million in 2001).
In the coming years the EIB will remain an important source of finance for the Western Balkans Countries, together with the European Commission, the European Agency for Reconstruction, and other international donors, including the World Bank and EBRD. Plans for 2003/04 foresee for the EIB an annual lending level of some EUR 400 million.
Investment in three areas will receive increasing EIB support in the coming years: private sector, human capital, and environment. Support for the private sector will encompass foreign direct investment. The development of human capital will include the health sector and as well as the strengthening of facilities to further innovation and R&D. As to environment, the EIB is currently finalising significant rehabilitation investments in infrastructure related to streets, communications and utilities within cities and municipalities of the region. An overview may be found in the recently published EIB Medium Term Strategy for Western Balkans.
To promote Foreign Direct Investment in the region, in 2002 the EIB made its first large private sector loan. It provided a EUR 25 million loan for the Lukavac Cement Factory, promoted by an Austrian company. Since 2001 the Bank began diversifying its lending to increase support for the private sector. Operations in the Western Balkans started in 1999, within the framework of the Stability Pact, mainly addressing transportation sector projects.