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DEVELOPMENT BANK PROPOSES HIGHWAY LOAN TO SLOVAK GOVERNMENT, HAS REGIONS IN MIND

A pile of money for a pile of concrete

AT A TIME when Slovakia is searching its pockets to find funds to build the roads it has promised foreign investors, the European Investment Bank (EIB) has offered the country a loan to lay down a highway bridging the western Bratislava with the eastern city of Košice.
EIB Vice President Wolfgang Roth announced the offer on April 1 shortly after he signed documents on a loan worth €95 million to co-finance projects partially covered by European Union cohesion and structural funds.

AT A TIME when Slovakia is searching its pockets to find funds to build the roads it has promised foreign investors, the European Investment Bank (EIB) has offered the country a loan to lay down a highway bridging the western Bratislava with the eastern city of Košice.

EIB Vice President Wolfgang Roth announced the offer on April 1 shortly after he signed documents on a loan worth €95 million to co-finance projects partially covered by European Union cohesion and structural funds.

The ministries of construction and regional development, the environment, and the economy will be using the loan to cover Slovakia's contribution to the cost of EU-funded projects.

The EIB would like to see the gap between the developed western and underprivileged eastern regions diminish.

"We here at EIB, co-responsible for regional integration, fear that we will get a wealthy Bratislava but a poor eastern region close to Ukraine. The EIB is interested in pushing regional development forward," Roth told The Slovak Spectator.

The vice president claimed that the bank was ready to finance many more projects than have so far been requested. He compared Slovakia's problem to that of Germany, with its developed western centres growing and the east lagging behind.

EU statistics have already ranked Bratislava among the wealthier regions with a GDP per capita above 75 percent of the EU average.

"The EIB wants the whole of Slovakia to develop, including Banská Bystrica and Poprad," Roth said.

The EIB president said that Slovakia could get a 30-year loan for highway construction with a 3.5 to 5 percent p.a. interest rate. During the first seven to 10 years, only interest, and not the principal, on the loan would be paid.

Roth added that it was now up to the Slovak government to decide whether to take the road construction loan.

During his April 2 talk with Slovak Transport Minister Pavol Prokopovič, Roth specified that the loan could be between Sk80 billion (€2 billion) and Sk100 billion (€2.5 billion).

The EIB agreed to have the state-owned company Dialničná spoločnosť as the loan guarantor. The company would be fed from the state budget, excise taxes on fuel, and highway tolls.

A detailed agreement on highway financing will be discussed in May in Luxembourg, the news wire SITA wrote.

The highway loan offer comes at a time when Slovakia needs to find the funds to meet its obligations to the South Korean carmaker Kia, which plans to build its plant in the northwestern town of Žilina.

The Slovak government promised to complete the 40-kilometre stretch of the Ladce-Žilina highway by the end of 2006, at a cost of Sk22 billion (€549 million).

This also means that the government has to adjust its original highway construction plans to the arrival of Kia Motors.

Responding to fears that the adjustment will put off other highway projects, Economy Minister Pavol Rusko promised that the construction of the southern link of the Bratislava - Košice highway would not be postponed.

Prokopovič proposed that the EIB get involved in financing the Ladce - Žilina section. The funds could be drawn on the basis of the framework agreement between Slovakia and the EIB, according to which Slovakia can draw €350 million in total. of this, €110 million has already been allocated to concrete projects, so the remaining €240 million can be used to finance the highway connection.

In 2003 the EIB provided €34.2 billion to EU members and €8.1 billion went to non-members (candidate countries).

Since 1990, the EIB has lent more than €25 billion in central and eastern Europe to finance projects fostering European integration.

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