+ * + COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 10.01.1996 
COM(95) 710 final 
REPORT FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
on the implementation of European Investment Bank loans for projects in central 
and eastern European countries 
(Poland, Hungary, the Czech Republic, the Slovak Republic, Romania. Bulgaria, 
Latvia, Estonia, Lithuania and Albania) 
(15.3.1993-31.12.1994) 

LIST OF CONTENTS 
1. Introduction 
2. Legal framework 
3. Activities of the European Investment Bank in central and eastern Europe in the 
period from 15 March 1993 to 31 December 1994 
4. The Bank's objectives and priorities 
5. Cooperation with other institutions 
1* Overview 
The present report on the activities of the European Investment Bank (ElB) in central and 
eastern European countries (Poland, Hungary, the Czech Republic, the Slovak Republic, 
Romania, Bulgaria, Estonia, Latvia, Lithuania and Albania) has been drawn up in 
accordance with Council Decisions 93/166/EEC of 15 March 1993 and 93/696/EC of 
13 December 1993. It covers the Bank's activities in the countries listed above during the 
period from 15 March 1993 to 31 December 1994. 
Pursuant to the above decisions, the ElB signed loan contracts for a total of 
ECU 921 million in 1993/94 . The contracts were signed in nine countries, including for 
the first time Estonia, Latvia and Lithuania. Moreover, during the reference period, the 
Bank assessed a number of important projects in Albania the contracts for which were 
signed in 1995. 
Financing concentrated on infrastructure essential for the economic development of these 
countries. Transport was the leading sector (ECU 356 million), followed by 
telecommunications (ECU 300 million) and energy (ECU 157 million). The remaining 
ECU 108 million were accounted for by projects in the industrial sector and by the 
construction of a sewage treatment plant. 
At its meeting in Essen at the end of 1994, the European Council confirmed the approach 
followed by the ElB in granting loans in central and eastern Europe. Through the loan 
programme, the Bank supports the reform process in these countries and contributes to 
the preparations for the accession of all the European countries with which the Union has 
concluded cooperation agreements. As in the past, the Bank has continued to operate in 
central and eastern Europe in close cooperation with PHARE and with the other 
international institutions working in the region. 
2. Legal framework 
The legal and institutional framework of the mandate given to the ElB in central and 
eastern Europe is laid down in the following decisions and documents: 
Council Decision 93/166/EEC of 15 March 1993 (OJ L 69 of 20 March 1993) 
granting a Community guarantee to the Bank against losses under loans for 
investment projects carried out in Estonia, Latvia and Lithuania. The guarantee 
covers in full any payments not received by the Bank but due under loans granted, 
in accordance with the usual criteria, in respect of investment projects carried out 
in the countries specified; it is restricted to an overall loan ceiling of 
ECU 200 million over a period of three years. 
Decision by the ElB Board of Governors of 13 July 1993 authorizing the Bank 
to lend on the basis of the Council Decision of 15 March 1993. 
Contract of guarantee signed by the Community and the ElB on 4 and 
17 November 1993. 
Council Decision 93/696/EC of 13 December 1993 (OJL321 of 
23 December 1993) granting a Community guarantee to the Bank against losses 
under loans for projects in central and eastern European countries The guarantee, 
which covers in full any payments not received by the Bank but due under loans 
granted, in accordance with the usual criteria, in respect of investment projects 
carried out in the countries specified, is restricted to an overall loan ceiling of 
ECU 3 000 million over a period of three years, beginning on 23 December 1993. 
If, on expiry of the three-year period, the loans granted by the Bank have not 
attained the overall amount referred to above, that period is to be automatically 
extended by six months. 
The loan guarantee ceiling includes the provisions laid down in respect of 
investments in Estonia, Latvia and Lithuania in Council Decision 93/166/EEC of 
15 March 1993. 
Decision by the EIB Board of Governors of 2 May 1994 authorizing the Bank 
to lend on the basis of the Council Decision of 13 December 1993 
Contract of guarantee signed by the Community and the EIB on 22 July and 
12 August 1994. This contract supersedes the guarantee contract relating to the 
Council Decision of 15 March 1993 mentioned above. 
3. Activities of the EIB in central and eastern Europe in the period from 
15 March 1993 to 31 December 1994 
The EIB signed 20 loan contracts in central and eastern Europe during the 
above-mentioned period for an aggregate amount of ECU 921 million. The contracts 
were signed in nine countries, including for the first time Estonia, Latvia and Lithuania. 
Details of the loan contracts signed are given in Table 1 below, while Table 2 shows the 
breakdown by country and sector of loans signed. 
During the reference period, most of the loan contracts signed concerned Poland (36.2%), 
followed by the Czech Republic (27.7%), Hungary (15.1%), Romania (7.2%) and Estonia 
(5.1%). Loan contracts signed with the Slovak Republic, Bulgaria, Lithuania and Latvia 
accounted for the rest. 
Furthermore, during the reference period, the Bank assessed a number of important 
projects in Albania. They include, among others, the financing for the expansion of the 
existing ferry terminal and associated works in the port of Durrës and the financing of 
small and medium-scale projects in industry, related services and tourism. (Contracts 
concerning these two projects were signed in the course of 1995.) 
Table 1. EÏB loans signed pursuant to the Council Decisions of 15 March 1993 and 13 December 1993 
COUNTRY 
Poland PROJECT 
Highways 
Warsaw Sewage Treatment Plant 
Telecommunications II 
Export Development liank Global Loan II DESCRIPTION 
Upgrading to motorway standards of the A4 
highway between Bielany and Nogawczyce 
Construction of a new sewage treatment plant 
Expansion and modernization of the existing 
telecommunications network 
Financing of small and medium-scale 
industrial projects LOAN 
amount 
(ECU m) 
125 
45 
150 
13 
Total 333 
Czech Rep. 
Total 
Hungary Berlin-Vienna Rail Corridor 
Telecommunications 1 - B 
Mero-Ikl (D-CZ) Pipeline 
Telecommunications II 
Municipal Infrastructure Global lx)an First phase of the modernization of the Czech 
section of the Berlin-Prague-Vienna rail 
corridor 
Modernization and expansion of existing 
network 
Construction of an oil pipeline linking the 
trans-alpine oil pipeline to the Druzhba oil 
pipeline, two hydrocarbon depots and a 
pumping station 
Modernization and expansion of the existing 
telecommunications network 
Financing municipal infrastructure projects 
through OTP Bank 125 
30 
100 
255 
100 
40 
Total 140 
Romania 
Total 
Estonia Romgaz Rehabilitation and Modernization 
Air Traffic Services - B 
District Heating Rehabilitation 
Port of Muuga Bulk Terminal 
Upgrading Air Traffic Services 
Estonian Investment Bank Global Loan(*) Rehabilitation and modernization of gas 
production facilities and transmission 
management system 
Modernization and upgrading of air traffic 
control facilities 
Rehabilitation of the district heating system in 
Pâmu 
Construction of a dry bulk terminal at the 
deep-sea port of Muuga 
Upgrading of air traffic control facilities 
Financing SMEs in industry, tourism and 
related services 50 
16 
66 
7 
15 
20 
5 
Total 47 
Slovak Rep. Air Traffic Services 
Telecommunications 1 - B Modernization of air traffic control 
infrastructure 
Modernization and expansion of existing 
network 15 
20 
Total 35 
Bulgaria Air Traffic Services - B Modernization and upgrading of air traffic 
control facilities 30 
Total 30 
Lithuania Vilnius airport Upgrading of Vilnius airport 10 
Total 10 
Latvia Investment Bank of latvia Global Loan(*) Financing SMEs in industry, tourism and 
related services, and environmental protection 
and energy-saving projects 5 
Total 5 
Grand Total 921 
(*) Signed on the basis of Council Decision 93/166/EEC. 
The Bank's operations covered the following sectors: 
Transport was the leading sector, with eight projects in seven countries totalling 
ECU 356 million, or almost 39% of total EIB lending in the area The motorway 
project in Poland and the upgrading of the Czech section of the 
Berlin-Prague-Vienna railway line with loans of ECU 125 million for each project 
dominated this sector. They were followed by air-traffic projects, such as the 
rehabilitation of air traffic control facilities in four countries and the modernization 
of Vilnius airport. Together, they accounted for ECU 91 million The remaining 
ECU 15 million were provided for the construction of a sea terminal in Estonia. 
Projects in telecommunications followed closely in importance, with four projects 
totalling ECU 300 million or 32.6% of total lending. They basically concerned the 
modernization and expansion of existing networks. 
Loans to energy projects amounted ECU 157 million or 17% of total lending. Of 
the three projects considered, the most important was the ECU 100 million loan 
for construction of an oil pipeline in the Czech Republic. 
Table 2. Breakdown by country and sector of loans signed 
-
Country 
Poland 
Czech Rep. 
Hungary 
Romania 
Estonia 
Slovak 
Rep 
Bulgaria 
Lithuania 
Latvia 
Overall 
1 in III igsaggga No. of 
loans 
4 
3 
2 
2 
4 
2 
1 
1 
1 
20 of which 
Total loan 
contracts 
signed 
(ECU m) 
333 
255 
140 
66 
47 
35 
30 
10 
5 
921 Transport 
37.5% 
49.0% 
24.2% 
74.5% 
42.9% 
100.0% 
100.0% 
38.7% Telecoms 
45.1% 
11.8% 
71.4% 
5.7.1% 
32.6% Energy 
39.2% 
75 8% 
14.9% 
17,0% Industry, 
other, 
mixed 
17.4% 
28.6% 
10.6% 
100.0% 
11.7% 
Projects in the industrial sector (ECU 63 million), where the main beneficiaries were 
small and medium-sized enterprises, and the construction of a sewage treatment 
plant in Poland for which ECU 45 million were provided accounted for the 
remaining 11.7% of total lending. 
The conditions attaching to EIB loans in central and eastern Europe are the same as those 
for loans in the Community, in particular* the duration of loans is generally between 8 and 
10 years for industrial projects and between 12 and 20 years for infrastructure projects. The 
interest rate charged by the Bank is the rate of borrowing from the market plus a small 
margin to cover administrative expenses, while repayment is usually in six-monthly 
instalments following a grace period of 3 to 5 years according to the project characteristics. 
4. The Bank's objectives and priorities 
The Bank's activities in central and eastern Europe continue to be focused on the 
development of infrastructures (particularly in transport and telecommunications), industry 
and energy, together with global loan operations. 
At its meeting in Essen at the end of 1994, the European Council confirmed this approach 
and called on the EIB to develop its loan operations, within the limits of the guarantee 
ceiling (ECU 3 000 million over an indicative three-year period), notably in the field of 
infrastructures in order to contribute to the preparations for the accession of all the 
European countries with which the Union has concluded cooperation agreements. The 
overall objective is to finance a balanced .mix of projects in all countries and sectors. 
The development of trans-European networks in the countries concerned and of links 
with intra-EU networks are particular priorities for the Bank. In this connection, the Bank 
has played an active part in defining priority transport corridors in central and eastern 
Europe and contributes to the work of the Christophersen Group. It has already financed 
several road and rail projects along the corridors and is appraising other such projects. 
Environmental issues are also of concern. The Bank's contribution to the protection of the 
environment comes not only in the form of support for projects of a purely environmental 
nature, such as the construction of a new sewage plant in Poland, but also indirectly through 
a number of projects in all sectors, particularly in the energy sector, which include 
significant environmental protection components. In fact, all project appraisals include an 
environmental impact assessment and identification of possible problems as well as 
solutions. Projects financed by the Bank must comply with relevant legislation on 
protection of the environment and must take into account internationally set 
recommendations. 
The Bank is currently examining many other possible projects with a view to signing 
contracts for the full amount of the overall loan ceiling of ECU 3 000 million 
5. Cooperation with, other institutions 
The Bank's activities in central and eastern Europe countries are conducted within the 
framework of the Community programme to help these countries progress towards 
market-oriented economies. They form part of a concerted approach that is being pursued 
in close cooperation with the Commission and with the international financing institutions 
working in the area. 
The Bank cooperates closely with the Commission within the framework of the G-24 and 
the PHARE Programme, so as to ensure that the necessary studies and technical assistance 
are implemented in support of EIB projects. Furthermore, during the reference period, the 
Bank and PHARE co-financed a road project in Poland. 
7 
Of the international financial institutions, the EIB works closely with the World Bank and 
the EBRD. Together, they finance many of the projects that have been undertaken in the 
area, with a view to maximising the impact of their activities to the benefit of the countries 
concerned. During the reference period, the ElB co-financed with the World Bank projects 
in the energy sector in Estonia and Romania and in the telecommunications sector in the 
Czech and Slovak Republics and with the EBRD projects in the telecommunications sector 
in the Czech Republic. 
ISSNQ254-1475 
COM(95) 710 final 
EN 11 
Catalogue number : CB-C0-95-759-EN-C 
ISBN 92-77-98658-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg