COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.10.1996 
COM(96) 501 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) 
(1.1.1995-31.12.1995) 

LIST OF CONTENTS 
1. Introduction 
2. Legal framework 
3. Activities of the European Investment Bank in central and eastern Europe in 
1995 
4. The Bank's objectives and priorities 
5. Cooperation with other institutions 
JL 
1. Introduction 
The present annual report on the activities of the European Investment Bank 
(EIB) in central and eastern Europe has been drawn up in accordance with 
Council Decision 93/696/EC of 13 December 1993 (OJ L 321 of 23 
December 1993). It relates to the second year of implementation of the 
Council Decision and covers the period from 1 January to 31 December 1995. 
2. Legal framework 
The legal and institutional framework of the mandate given to the EIB in 
central and eastern Europe is laid down in the following decisions and 
documents: 
- 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 is restricted to an overall loan ceiling of ECU 3 000 million 
over a period of three years, beginning on 23 December 1993. The guaran­
tee 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 in the Decision. 
(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 1995 
In 1995 the EIB signed 19 loan contracts in central and eastern Europe for 
an aggregate amount of ECU 973 million, compared with ECU 921 million in 
the previous year. 
3.1 Geographical spread 
Project activity is closely correlated to the pace of economic reform. 
Countries where reforms were undertaken earlier and are now at a more 
advanced stage continue to show a higher absorption of loans. Table 1 shows 
that loans signed in the Czech Republic, Hungary, Romania and Poland 
accounted for nearly 80% of total lending in 1995. The remaining lending 
was accounted for by Bulgaria, Albania (first-time lending), Lithuania and 
Estonia. 
Table 1 Geographical distribution of EIB lending in 1995 
Country Number Total loan 
of loans contracts signed 
(ECU m) 
Czech Republic 3 260 (26.7%) 
Hungary 2 200 (20.6%) 
Romania 3 175 (18.0%) 
Poland 2 140 (14.4%) 
Slovak Republic 2 80 (8.2%) 
Bulgaria 1 60 (6.2%) 
Albania 3 34 (3.5%) 
Lithuania 2 19 (2:0%) 
Estonia 1 5 (.5%) 
Aggregate IS) 973 (100%) 
3.2 Sectoral spread 
The Bank's operations in central and eastern Europe have taken place in all 
economic sectors (Table 2). EIB loans have contributed to the 
implementation of various projects in infrastructure, which plays a key role in 
the implementation of the reforms, as well as to the support for industrial 
projects in particular SMEs. 
Energy is the leading sector as regards infrastructures with four projects in 
three countries totalling ECU 290 million and representing almost 30% of 
total EIB lending in the area during 1995. Projects in this sector relate to the 
improvement of thermal power stations and the modernization of power 
production and transmission. Projects in the transport sector followed closely 
in importance with over 24% of total lending. Loans were signed in six 
countries for a total of ECU 238 million in support of seven projects for the 
upgrading of transport systems to European standards. Road and rail 
transport projects supported by the Bank form part of larger corridors of the 
Trans-European Networks or of transit routes of vital interest to the 
Community and its transport policies. Projects in the telecommunications 
sector represented 13.4% of total EIB lending in 1995. Two loans for a total 
of ECU 130 million were signed for the expansion and modernization of the 
telecommunications network. 
Support for the industrial sector (over 32%), where the main beneficiaries 
are small and medium-sized operations, accounts for the largest single share of 
the Bank's activities in central and eastern Europe during 1995. It should be 
borne in mind that EIB support for SMEs is channelled through appropriate 
financial intermediaries who have access to EIB funds either in the form of a 
global loan - line of credit contracted between the Bank and a specific 
financial institution - or in the form of an APEXXom - line of credit open to a 
number of qualified institutions within a particular country and usually 
channelled via the central bank. In all, loans signed in the industrial sector 
amounted to ECU 315 million, of which just over 82% are global loans. 
Table 2. Breakdown by country and sector of EIB loans signed in 1995 
Country 
Czech Rep. 
Hungary 
Romania 
Poland 
Slovak Rep. 
Bulgaria 
Albania 
Lithuania 
Estonia 
Aggregate Total loan 
contracts 
signed 
(ECU m) 
260 
200 
175 
140 
80 
60 
34 
19 
5 
973 
(100%) 0 
Energy 
200 
60 
30 
290 
(29.8o/o) Transport 
60 
35 
40 
60 
29 
14 
238 
(24.5%) 'which 
Telecoms 
50 
80 
130 
(13.4%) Industry, 
other, 
mixed 
150 
100 
50 
5 
5 
5 
315 
(32.4%) 
Table 3 below gives details of the loan contracts signed during 1995. The list 
of all loans signed at 31 December 1995 under the current mandate is given in 
the Annex. 
3.3 Monitoring 
The Bank monitors investment throughout the implementation of the project 
and up to the end of the loan period. Disbursements are spread over rather 
long periods, a situation which is usual for infrastructure loans with long 
maturity periods (12 to 20 years) and is typical in the case of credit lines, 
where the disbursement takes place only after the decision to support the 
implementation of an individual investment has been taken. 
As to the servicing of the loans, repayments have been punctual. 
Table 3. EIB loans signed between 1 January and 31 December 1995 pursuant to the Council Decision of 13 December 1993 (93/696/EC) 
COUNTRY 
Albania 
Bulgaria 
Czech Republic 
Estonia 
Hungary PROJECT 
East-West road corridor 
Ferry terminal at the Port of 
Durres 
APEX global loan 
Transit roads II 
CEZ I (Power Plant Improve­
ments) - Tranche A 
CEZ I (Power Plant Improve­
ments) - Tranche B 
Roads 
Estonian Investment Bank 
Global loan - Tranche B 
Financial sector global loan 
Telecommunications II -
Tranche B DESCRIPTION 
Rehabilitation and improvement of some 94 km of 
roads along the main East-West road corridor 
Expansion of the existing ferry terminal at the Port of 
Durres and priority repairs of quays and storage areas 
Financing of small and medium-sized industrial, agro-
industrial, tourism and related services as well as 
projects promoting environmental protection and 
energy conservation 
Rehabilitation and reconstruction of some 900 km of 
main transit roads 
Installation of desulphurization equipment at six power 
stations 
Installation of desulphurization equipment at six power 
stations 
Improvements to the road network 
Financing of small and medium-sized enterprises in 
industry, tourism and related services 
Financing of industrial, infrastructure and tourism 
projects 
Expansion and modernization of the 
telecommunications network AMOUNT 
OF LOAN 
(ECUm) 
24 
5 
5 
60 
100 
100 
60 
5 
150 
50 TOTAL 
COUNTRY 
(ECUm) 
34 
60 
260 
5 
200 
COUNTRY 
Lithuania 
Poland 
Romania 
Slovak Republic 
TOTAL PROJECT 
] • of Klaipeda 
* * ."vj^nian Development Bank 
,.-'•"031 loan 
Financial sector Global Loan 
Railways III 
Telecommunications 
i 
| 
| Heat and power rehabilitation 
j 
i 
| Constanta Port rehabilitation 
1 
State Bank and global loan II 
{ SPP gaz transmission DESCRIPTION 
Construction of a small container terminal and 
improvements to the roll-on/roll-off terminal 
Financing of small and medium-sized enterprises in 
industry, tourism and related services 
Financing of small and medium-scale investments in 
industry, infrastructure and tourism 
Rehabilitation and upgrading of the first section of the 
Warsaw-Terespol TEN railway line 
Expansion and modernization of the 
telecommunications network 
Rehabilitation and modernization of heat and power 
production and electricity transmission and distribution 
facilities 
Repair of storm and accident damage to, and comple­
tion of, breakwaters 
Financing of term credit operations in industry, tourism 
and related services, environmental protection and 
energy conservation 
Modernization and extension of the Slovak 
international gas transit and domestic networks AMOUNT 
OF LOAN 
(ECU m) 
14 
5 
100 
40 
80 
60 
35 
50 
30 TOTAL 
COUNTRY 
(ECUm) 
19 
140 
175 
80 
973 973 
4. The Bank's objectives and priorities 
The Bank assists those central and eastern European countries whose long-term 
goal is to prepare themselves for EU membership, by helping them create the 
economic framework necessary to qualify for membership. The examples of 
Greece, Portugal and Spain provide a historic parallel. The EEB started its 
lending activity many years before those countries finally joined the Community 
and helped them to meet the conditions for membership. 
The EIB's role is, above all, that of a catalyst in the difficult task of mobilizing 
financing packages for major infrastructure projects. This is very much in 
keeping with its specific character as a provider of complementary finance, i.e. 
as a Bank which steps in when funds from the commercial sector are unavailable 
or insufficient. 
The EIB is particularly involved in the extension to the countries of central and 
eastern Europe of the Trans-European Networks in roads and railways, on the 
basis of the road and rail corridors defined by the Pan-European Conference of 
Transport Ministers as development priorities for the medium term. 
5. Cooperation with other institutions 
The Bank's activities in the countries of central and eastern Europe are 
conducted within the framework of the EU programme to help those countries 
to prepare for accession to the Union, in particular by financing investment 
aimed at integrating the infrastructure (transport, telecommunications, energy, 
environment) of the countries concerned with that of the EU and by assisting 
SMEs. Whenever possible, co-financing is established with other institutions, in 
particular to meet the above objectives. The Bank's activities thus form part of 
a concerted approach that is being pursued in close cooperation with the 
Commission and, as appropriate, with the international financial institutions 
working in the area. 
The Bank cooperates closely with the Commission, in particular with PHARE. 
In addition to frequent PHARE assistance during the pre-investment phase 
(studies and technical assistance support), the Bank and PHARE have 
co-financed during the reference period a rail project in Poland, a roads project 
in the Czech Republic, road and port development projects in Albania, an 
energy project in Romania and a port development in Lithuania. 
Of the international financial institutions, the EIB works closely with the EBRD 
and the World Bank. Together, they finance some of the projects that have 
been undertaken in the area, with a view to maximizing the impact of their 
activities to the benefit of the countries concerned. During the reference period, 
9 
the EIB co-financed with the EBRD and the World Bank a project in the energy 
sector in Romania. 
The share of the different financing sources in projects financed by the EIB is 
shown below. 
Table 4. Share of PHARE and international financial institutions in projects 
financed by the EIB during 1995 _ 
(ECUm) 
Country 
Albania 
Bulgaria 
Czech Rep. 
Estonia 
Hungary 
Lithuania 
Poland 
Romania 
Slovak Rep. 
TOTAL EIB 
34 
60 
260 
5 
200 
19 
140 
175 
80 
973 
( 33%) EBRD 
2 
183 
185 
(7%) IBRD 
160 
160 
(6%) Other ' 
2 
61 
280 
5 
840 
36 
23 
176 
73 
1496 
(51%) PHARE 
31 
12 
10 
5 
20 
15 
93 
(3%) TOTAL 
69 
133 
550 
10 
1040 
60 
183 
709 
153 
2907 
(100%) 
1 States, public bodies or other domestic financial sources, including own funds of 
borrower/promoter. 
/W 
Annex 1 
CENTRAL AND EASTERN EUROPE 
EIB loans signed during the period 15.3.1993-31.12.1995 on the basis of the Council 
Decisions of 15 March 1993 (93/166/EC) and 13 December 1993 (93/696/EC) 
COUNTRY 
Albania 
Bulgaria 
Czech 
Republic 
Estonia 
Hungary 
Latvia 
Lithuania Date 
of 
signature 
1995 
1995 
1995 
1994 
1995 
1994 
1994 
1994 
1995 
1995 
1995 
1993 (*) 
1994 
1994 
1994 
1995 
1994 
1994 
1995 
1995 
1993 (*) 
1994 
1995 
1995 PROJECT 
East-West road corridor 
Ferry terminal at the Port of Durres 
APEX global loan 
Air traffic services - B 
Transit roads II 
Berlin-Vienna rail corridor 
Mero-IKL (D-CZ) pipeline 
Telecommunications 1 - B 
CEZ I (power plant improvements) - A 
CEZ I (power plant improvements) - B 
Roads 
Estonian Investment Bank global loan -
Tranche A 
Upgrading air traffic services 
Port of Muuga bulk terminal 
District heating rehabilitation 
Estonian Investment Bank global loan -
Tranche B 
Telecommunications II 
Municipal infrastructure global loan 
Financial sector global loan 
Telecommunications II - Tranche B 
Investment Bank of Latvia - Global loan 
Vilnius Airport 
Port of Klaipeda 
Lithuanian Development Bank - Global 
loan Amount 
of loan 
(ECU m) 
24 
5 
5 
30 
60 
125 
100 
30 
100 
100 
60 
5 
20 
15 
7 
5 
100 
40 
150 
50 
5 
10 
14 
5 COUNTRY 
TOTAL 
(ECU m) 
34 
90 
515 
52 
i 
340 
i 
5 
29 
11 
COUNTRY 
Poland 
Romania 
Slovak 
Republic Date 
of 
signature 
1994 
1994 
1994 
1994 
1995 
1995 
1994 
1994 
1995 
1995 
1995 
1994 
1994 
1995 
1995 PROJECT 
Telecommunications II 
Highways 
Warsaw sewerage treatment plant 
Export Development Bank global loan 
Financial sector global loan 
Railways IÎI 
Romgaz rehabilitation and 
modernization 
Air traffic services - B 
Telecommunications 
Heat and power rehabilitation 
Constanta port rehabilitation 
Telecommunications 1 -B 
Air traffic services 
State Bank and global loan II 
SPP gaz transmission Amount 
of loan 
(ECU m) 
150 
125 
45 
13 
100 
40 
50 
16 
80 
60 
35 
20 
15 
50 
30 COUNTRY 
TOTAL 
(ECU m) 
473 
241 
115 
TOTAL 
1894 1894 
(*) Signed on the basis of Council Decision 93/166/EEC. 
01 
KSN 0254-1475 
COM(96) 501 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-96-504-EN-C 
ISBN 92-78-09948-1 
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