The European Investment Bank (EIB) provides loans in Hungary for the construction of the Budapest Ring Road M0, the rehabilitation of the railway line connecting Budapest with the border to Romania and for the financing of smaller projects mainly implemented by SME's and municipalities by means of EIB Global Loans extended to OTP Bank and MKB Bank.
The loans supporting the transport and environment infrastructure development will co-finance projects in conjunction with the EU Cohesion Fund. The Hungarian National Development Plan identified these projects as priorities and EIB's lending will facilitate the implementation of the Hungarian national strategy of furthering the country's integration with the EU. EIB financing will cover Hungary's needs as regards the co-financing portion of projects receiving EU grant support. The Bank's loans will support project implementation by providing funds in advance of the receipt of the corresponding EU grant payments.
Mr. Wolfgang Roth, EIB Vice-President who signed the loans, stated: I very much welcome today's signature marking the first operations by the Bank offering co-financing with EU Cohesion Funds in Hungary. This follows the extensive financial support by the Bank to the ISPA programme. Combining EIB lending with EU grants to finance projects will help deepen the integration of Hungary into the European Union, through the provision of better and safer transport connections with neighbouring countries.
Budapest Ring Road M0 (EUR 50 million): This project covers the construction of 26.5 km of the Eastern section of the Budapest Ring Road M0 motorway between the trunk road No. 4 and the M3. The connecting 12.2 km long motorway branch to Gödöllö has also been appraised by the Bank's services and could form part of a future project. The new motorway section of the M0 will provide drivers with the possibility to avoid other routes in central parts of the Hungarian capital and therefore will contribute to the reduction of pollution and noise as well as to increased car safety in the city and its surrounding areas. The new motorway sections are part of the Trans-European Transport Network and therefore are of significant importance in linking Budapest with the neighbouring countries.
Modernisation of the Railways Corridor between Budapest and Lökösháza (EUR 27 million): The EIB loan will serve for the rehabilitation of 131 km of the railway lines between Budapest Ferencváros - Vecsés and Szolnok - Lökösháza. These railroads represent part of the Pan European Transport corridor No IV connecting Berlin with Bucharest via Prague and Budapest. The purpose of the project is to eliminate bottlenecks and to upgrade the railway's quality in order to increase transport speed. A new signalling system will promote passenger safety and help to bring the Hungarian rail transport standards in line with those of the EU.
Global Loans to OTP Bank (EUR 50 million) and Magyar Külkereskedelmi Bank (MKB) (EUR 30 million): The EIB has signed Global Loan agreements with OTP Bank and MKB to serve for the financing of small- and medium-scale projects promoted by a range of private and public promoters in the field of energy, energy savings, environmental protection, infrastructure, health and education facilities, industry, services or tourism in Hungary.
- Under this first Global Loan signed with Hungary's largest bank OTP Bank, both OTP and final beneficiaries will also have access to the EIB's Municipal Infrastructure and Municipal Finance Facilities. These schemes benefit from EU grants under the Phare Programme and provide incentives to the final borrowers - mainly municipalities - as well as to OTP Bank. The Municipal Infrastructure Facility is focused on investments of municipalities in the area of environment, transport, health and education in the Nyugat Dunantúl border region. The Municipal Finance Facility promotes building, upgrading or refurbishing of small municipal infrastructure in the entire territory of Hungary.
- The Global Loan granted to MKB is the first of its kind signed with this bank. It will increase to eleven the number of banks operating in Hungary and providing EIB Global Loans, thus with positive implications to customers.
EIB Global Loans have been developed as a successful tool in providing long-term EIB funds for financing smaller projects implemented by the SMEs or by municipalities under favourable conditions. They represent credit lines to financial intermediaries - EIB partner banks - that on-lend EIB funds under their own management, at their own risk and own conditions but which should reflect the favourable lending condition of the EIB.
Earlier today a loan to Diakhitel, the Student Loans project, for EUR 100 million was signed. The loan project will provide new funding opportunities for students under the age of 35 to finance their studies at Hungarian higher education facilities. This will also make higher-level education more accessible for students with insufficient financial resources.
The EIB, the European Union's financing institution, finances projects that contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. Outside the Union the EIB implements the financial components of agreements concluded under European development aid and cooperation policies.
The EIB is the most important external source of finance for Central and Eastern Europe. Since 1990, the EIB has lent a total of some EUR 30 billion in the new Member States and Acceding Countries Bulgaria and Romania. Loans provided in Hungary have already exceeded EUR 4.5 billion during the mentioned period.