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Five banks fund European highway links for 2005

A new Slovak highway system stretching from Bratislava to Budapest, Ukraine and the High Tatras, and linking Žilina with Warsaw will be in place by 2005, the Slovak Ministry of Transportation says.
According to the ministry's spokesman Emil Picha, the matrix is the fruit of an agreement reached last year between Slovakia and the European Union to connect the country with four of Europe's nine main transport corridors. The plan is part of a larger one which envisages Slovakia as a transport axis between Berlin and Istanbul; Trieste, Italy and Lvov, Ukraine; Gdansk, Poland down through Žilina; and points on the Danube River -regarded as the fourth "Slovak" transport corridor.

A new Slovak highway system stretching from Bratislava to Budapest, Ukraine and the High Tatras, and linking Žilina with Warsaw will be in place by 2005, the Slovak Ministry of Transportation says.

According to the ministry's spokesman Emil Picha, the matrix is the fruit of an agreement reached last year between Slovakia and the European Union to connect the country with four of Europe's nine main transport corridors. The plan is part of a larger one which envisages Slovakia as a transport axis between Berlin and Istanbul; Trieste, Italy and Lvov, Ukraine; Gdansk, Poland down through Žilina; and points on the Danube River -regarded as the fourth "Slovak" transport corridor.

Even if the proposed new "backbone of the Slovak highway system" provides better access to European hubs, the question remains whether the country's budget will be able to handle the project's estimated 200 billion Sk pricetag.

Asked what percentage of the state budget the project will cost, Picha would not estimate, but said the project comprises "a different percentage each year." Funding credits have come from various sources, he noted, including the state roads authority and the EU through its financial daughter foundation PHARE.

On October 22, an association of five banks, led by Všeobecna Úverová Banka (VÚB) signed a loan of 2 billion Sk to support the project. Loan shares of the banks are 1.2 billionSk from VÚB, 250 million Sk from Poštova Banka in Bratislava, 200 million Sk each from Banská Bystrica's Dopravná Banka and Košice's Priemyselna Banka, and 150 million Sk from Prvá Komunalná Banka in Žilina.

Interest on the 10-year loan is based on the longest Bratislava interbank offered rates (BRIBOR), which is currently the interest on six-month deposits.

The loan is not guaranteed by the government, since budgetary rules prohibit state guarantees for state funds. The State Road Fund will need an additional 7 billion Sk for highway construction next year. The banks and the Fund are likely to try to amend central bank rules limiting loans to a single client so that they can participate again next year. By the time the loan is due, the project should be completed and tolls imposed on all corridors save for the Danube river corridor.

If the proposed new "backbone of the Slovak highway system" will provide smoother access to commercial and tourist hubs, however, Slovakia's budget may need a fiscal marrow-transplant.

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