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SLOVAKIA RECEIVES ANOTHER FINANCIAL TRANSFUSION FROM THE EUROPEAN INVESTMENT BANK

Loans to bridge East-West gaps

THE EUROPEAN Investment Bank (EIB) has prepared a solid foundation on which to build a bridge to join the wealthy western regions of the country with the underfed eastern parts. The foundation comes in the form of €70 million in global loans to small- and medium-size enterprises (SMEs) and municipalities in Slovakia.
Eastern Slovakia's sad ratings on the EU unemployment charts and the closure of several regional schools show that it is thirsty for investment. Loans supporting SMEs and municipalities could mean a real boost to the local economy.


FINANCE Minister Mikloš and EIB VP Pilip seal the deal.
photo: TASR

THE EUROPEAN Investment Bank (EIB) has prepared a solid foundation on which to build a bridge to join the wealthy western regions of the country with the underfed eastern parts. The foundation comes in the form of €70 million in global loans to small- and medium-size enterprises (SMEs) and municipalities in Slovakia.

Eastern Slovakia's sad ratings on the EU unemployment charts and the closure of several regional schools show that it is thirsty for investment. Loans supporting SMEs and municipalities could mean a real boost to the local economy.

An information officer with the European Investment Bank, Dušan Ondrejička told The Slovak Spectator that EIB global loans are "a well-verified tool" to support small and medium businesses and municipalities, and increase economic prosperity.

"SMEs represent a very flexible sector of the Slovak economy. It is expected that the global loans signed November 12 [with Slovenská sporiteľna and ČSOB Leasing] will contribute to an increase in the productivity and competitiveness of SMEs and local governments, and generally contribute to the economic growth and employment throughout Slovakia," Ondrejička said.

Acting in partnership with the EIB, Slovenská sporiteľna will manage €50 million in loans and ČSOB Leasing will handle the remaining €20 million. SMEs and municipalities can apply for the global loans to fund modest projects in the areas of environmental protection, rational energy use, infrastructure, industry, education development, healthcare facilities, urban renovation, tourism, and other projects that could further inspire economic growth.

With the addition of Slovenská sporiteľňa and ČSOB Leasing, the number of EIB partner banks in Slovakia has increased to six. According to Ondrejička, EIB partners represent well-established and high-performing banks with a positive record of cooperation with the EIB.

The EIB loan signed with the Slovenská sporiteľňa is the first global loan in Slovakia involving the Municipal Infrastructure Facility and the Municipal Finance Facility, two projects proposed by the European Commission. These facilities support small-scale municipal infrastructure investments with total costs ranging between €40,000 and €5 million.

The loan to ČSOB Leasing is the second loan provided to the ČSOB group. The first loan, totalling €100 million, is also accessible to Slovak SMEs and municipalities.

Slovenská sporiteľňa and ČSOB Leasing, like all EIB partner banks, manage EIB funds at their own risk; they only have to meet certain conditions of the original loan agreement.

"In general, EIB global loans are provided to applicants under the presumption that they will meet the loan agreements and fulfil minimum requirements. Of course, every project approved for a loan has to be economically viable and technically and environmentally sound," Ondrejička told The Slovak Spectator.

International institutions, including the World Bank, believe regional disparities can be solved when governments make investments in infrastructure projects, particularly in support of emerging, market-driven growth poles within countries.

A loan signed between the EIB and the Slovak Finance Ministry to construct a new motorway between Mengusovce and Jánovce, near Poprad, comes at a time when the government is searching for money to fund projects it promised foreign investors.

Under the first agreements, the EIB will provide Slovakia €30 million for the construction of a new 25.8-kilometre section of the Mengusovce to Jánovce D1 motorway in eastern Slovakia.

"The money represents the second phase of a framework loan totalling €350 million," said Ivan Pilip, the EIB vice president responsible for operations in Slovakia.

Slovakia obtained the first part of the loan, standing at €68 million, last November.

The total cost of the highway stretch between Mengušovce and Jánovce is estimated at €705 million.

The EIB has agreed to lend €350 million of that sum, while Slovakia must provide €195 million from the state budget.

According to Pilip, "The EIB supports the extension and upgrading of the motorway network in new EU member states, especially along the Pan-European corridors that are significant to fostering a single EU market."

Since 1990, the EIB has injected a total of €27 billion in Central and Eastern Europe to support EU integration projects. Of this sum, 50 percent has been invested in transport projects.

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