The European Investment Bank (EIB) is lending EUR 50 million for the rehabilitation of local roads and upgrading of facilities in the education, health, social care and culture sectors in the Zlín Region, eastern Moravia.
The EIB funds will support the implementation of priority schemes under the regional investment programme 2004 - 2009. The schemes in the area of transport will help modernise and rehabilitate the regional road network and improve its safety. In the other sectors, the project will include the reconstruction of two hospitals (Vsetín hospital and Bat'a Regional Hospital in Zlín) and reconstruction and extension of a secondary school in Valaaské Mezirící. The Bank's loan carries a maturity of up to 25 years, with a grace period of up to 7 years for the repayment of principal, and will cover up to 50% of the project's cost.
Since the Czech Republic's accession to the EU, the EIB has increased its direct lending to the country's local authorities (regions and municipalities) to provide strong support for their long-term investment plans. By the end of 2005, the Bank will have signed some EUR 290 million with Czech regions and cities outside the capital Prague.
EIB Vice-President Ivan Pilip commented: The EIB grants long-term loans to local authorities in the new Member States on very competitive terms and provides them with technical advice, quality control and monitoring support. This is proving to be highly appreciated, as demonstrated by the financing contracts concluded with eight local authorities in 2005. More are expected in 2006.
Most of these funds will be disbursed in Czech Koruna (CZK), either at fixed or floating interest rates, below market conditions (Sub-Pribor). This provides a suitable way of complementing other sources of funds (like commercial bank loans) and lowering the overall cost of funds for the local authority.
The EIB borrows the funds needed for its lending on the capital markets. Its bonds have always been rated "AAA" by the leading rating agencies. The EIB funds projects that contribute to the balanced development and economic and social cohesion of the EU Member States. Since 1990, the EIB has lent a total of some EUR 32 billion in Central and Eastern Europe, of which some EUR 6 billion financed projects in the Czech Republic.