The European Investment Bank (EIB), the European Union's financing institution, is making available a total of EUR 70 million for Small and Medium Sized Enterprises (SMEs) and environment in Serbia and Montenegro. The relevant documents have been signed for Serbia and Montenegro by Mr P. Ivanovic, Minister of International Economic Relations of Serbia and Montenegro, as well as by Mr R. Jelasic, Central Bank Governor for the loan directed to SMEs and by Mr M. Dinkic, Minister of Finance of Serbia, and representatives of the Cities of Nia Mr. T. Ðordevic and Novi Sad Mr. B. Pomoriski, respectively for the loan directed to environmental investments in these two Cities. Mr. T. Brown, Director General and Mr. A. Querejeta, Legal Council, signed for the EIB.

The financing agreed in Belgrade today is as follows:

EUR 45 million in the form of a global loan with the Central Bank for Small and Medium-sized investments by private sector companies and Municipalities in Serbia and Montenegro. It includes also a window for support to micro-enterprises, a segment that so far had only limited access to cheap long term funds for their investments.

The Central Bank will channel the EIB funds through a number of banks to be agreed with the EIB.

In support of this global loan the European Agency for Reconstruction (EAR) provides Technical Assistance made available to the Central Bank's dedicated Fund Management Unit, as well as to the other partner banks of this facility. The Technical Assistance, which will be provided by internationally experienced staff, aims to support and train bank staff in SME lending.

This is a follow up of EIB's first global loan provided to the Central Bank in 2002 of EUR 20 million, which has been successfully utilised within two years after its signature in favour of 24 projects. Through this first global loan some 600 new jobs have been created in sectors such as construction, agro- and food industry, packaging, pharmaceuticals, local transport, manufacturing of cleaning and sanitary products and textile industry.

The global loan aims at serving private sector and small public infrastructure financing needs. It also contributes to the availability of long-term lending facilities domestically and underlines the continuing commitment of the EIB to supporting worthwhile investment projects, via reliable local banking partners.

EUR 25 million is for water supply and sanitation services in the greater area of the two major Serbian cities Novi Sad and Nia. Upon its completion in 2007, the project will serve some 600 000 people. For maximising the benefits from IFI operations in the region by creating synergies, the project has been prepared in cooperation with EBRD and KfW.

EIB will increasingly address the needs of the municipal sector in Serbia, as is already doing in other countries of Central and Eastern Europe. Operational contacts are well established with the Municipal Infrastructure Agency and a possible EIB Facility dedicated to medium and small Serbian Municipalities is now under preparation and could be finalised in the near future.

The EIB is a lead player in implementing the European Union's priority objectives. The Bank has been progressively increasing its long-term lending in the Western Balkan countries to its current EUR 400 million per year. Looking forward to a closer integration of the region with the EU, the Bank is now focusing on investments to improve human capital, municipal development and to stimulate the private sector, particularly SMEs. These investments will complement the traditional financial support given to upgrade and reconstruct infrastructure.