The European Investment Bank (EIB) extends a global loan of EUR 20 million to Volksbank Czech Republic to finance projects undertaken by small and medium-sized enterprises and municipalities in the Czech Republic.

The loan will co-finance projects at up to 50% of their total cost in the fields of environmental protection and improvement, rational use of energy, infrastructure, industry, development of education and health care facilities, tourism or other projects enhancing the knowledge-based economy in the Czech Republic.

Volksbank will benefit under this global loan from the SME Finance Facility, a special scheme promoted by the European Commission under the PHARE Program. Aimed at further developing strong and competitive small and medium-sized enterprises in the new Member States, the SME Finance Facility provides the EIB's partner banks with incentives to lend to SMEs. The global loan will further contribute to the increase in long-term financing for small-scale investments in the Czech Republic - an important element in supporting economic growth.

Global loans are credit lines to financial intermediaries - EIB partner banks that onlend EIB funds under their own management, at their own risk and on their own conditions but which should benefit from the EIB's favourable lending conditions. This type of lending is used by the EIB to finance small and medium-sized projects involving a total investment in excess of EUR 40 000 but lower than EUR 25 million.

Mr Ivan Pilip, EIB Vice-President responsible for financial operations in the Czech and Slovak Republics and Poland, commented: The EIB supports development of SMEs, which represent an important sector of the Czech economy, characterised by its flexibility and the creation of job opportunities, especially in the less developed regions. With the possibility of financing municipalities too, the Bank's funds will further contribute to providing a positive investment environment across the country's regions.

EIB lending activity in the Czech Republic has amounted to approximately EUR 5.3bn since 1990. The Bank's operations cover the most important sectors of the country's economy, with the emphasis on basic transport (rail and road), environmental and municipal infrastructure, development of industry and services as well as of education and health facilities. During the period in question the EIB has signed global loan facilities for a combined amount exceeding EUR 550 million with banks operating in the Czech Republic.

Since 1990, the EIB has lent a total of some EUR 27 billion in Central and Eastern Europe to finance projects fostering European integration, approximately EUR 4 billion of this figure being provided through global loans. The EIB is the most important external source of finance for Central and Eastern Europe.