The European Investment Bank (EIB) has agreed to lend 200 million euros (9 billion Slovak crowns) to Slovakia's state railway company ŽSR as part of a wider strategy to develop the central European railway corridor.
The ŽSR will be issued 120 million euros of the loan in 1999, with the other 80 million arriving in the year 2000. The loan is a 15-year credit at a fixed interest rate of 5.05%, and bears a Slovak government guarantee.
Deputy Finance Minister Vladimil Podstránsky explained that in order to get the loan, the government had to promise to restructure ŽSR, including cutting 25 to 30% of its 48,500-strong workforce in the next seven years. The ŽSR has already announced plans to dismiss 10,000 employees over the next two or three years.
The EIB funds will be invested mainly in structural improvements to a critical 30 kilometre stretch of railway between the northern Slovak city of Žilina and the Polish border, as well as in the modernisation of the ŽSR's own telecommunications network, in the purchase of 35 new passenger railcars, and in the purchase or refurbishment of some 1,800 freight wagons.
The latest loan brings EIB lending to projects in Slovakia to a total of 865 million euros.
EIB Vice-President Wolfgang Roth said that the Slovak railway network will be at the heart of an enlarged European Union, because Slovakia is crossed by three pan-European railway corridors, linking Berlin, Warsaw and Prague with Bratislava, Budapest, Bucharest, and Sofia.
"Our loan for Slovakia's railway modernization program brings to nearly 500 million euros the total provided by the EIB this year for the development of an efficient rail network in those central European countries that are to become full-fledged members of the EU in the near future," said Roth.
"In the accession countries, the EIB has thus become the most important provider of funds for transport infrastructure in general and for railways in particular."
Since 1990, the EIB has lent some 9.5 billion euros to projects in twelve central and eastern European countries. In 1999, the EIB is planning to lend another 3 billion euros to projects in central Europe. About half of this sum comes under a special Pre-Accession Facility set up to help the ten candidates for accession in the region to prepare for EU membership.
