The European Investment Bank (EIB), the European Union's long-term lending institution, is providing a loan of EUR 250 million in support of the private sector in Turkey.

The EIB funds, in the form of global loans, will be channeled through five Turkish partner banks, to small and medium-sized private sector projects in the areas of industry, services and tourism. The five partner banks include the EIB's two long standing partners - Industrial Development Bank of Turkey (TSKB) and Turkiye Vakiflar Bankasi (Vakifbank) - as well as three new partner banks: the Development Bank of Turkey (TKB), Turkiye Halk Bankasi and TC Ziraat Bankasi.

This global loan is a follow up of the EIB's highly successful previous industrial sector global loan facilities of EUR 200 million and EUR 125 million - signed in April 2003 and July 2001 respectively - which leveraged more than EUR 1 billion of private sector project investment, creating some 10,000 additional jobs in the country.

The EIB, through this global loan, remains committed to supporting the banking sector's long-term lending activities and, with a broadened base of partner banks, now hopes to have even greater reach to the SME sector throughout the country.

The new partner banks will also be supported by a long-term technical assistance contract, designed to reinforce and strengthen their long-term project lending capabilities. This technical assistance represents the EIB's first allocation to Turkey of grant financing from the EIB-EU Commission's recently established FEMIP Technical Assistance Fund.

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 to date with some EUR 2.5 billion towards projects of key importance for the Turkish economy, including two significant FDI project in the automotive sector.

EIB finance for infrastructure went mainly for environmental projects and the 1999 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 several global loans to local commercial banks.