Comportamiento ante el frío.

As political change in Central and Eastern Europe accelerated during 1989, the Euro- pean Union’s readiness to provide financial support for the troubled economies of the countries in the region followed step. In this context, the European Investment Bank provided its first loans for investment projects in Hungary and Poland in 1990. From the outset, the EIB’s lending focused on the energy, transport and telecommunications sectors, priority areas in vital need of rehabilitation or modernisation before these countries could transform their economic systems and build up a competitive industrial base. The first global loans to banks in these countries were also granted in 1990, help- ing to channel funds to small and medium-sized companies.

Very soon, the EIB became the biggest source of international finance for projects in Central and Eastern Europe. Successive lending mandates from the Bank’s Board of Governors have covered not only the ten candidates for EU membership but also Albania, Bosnia-Herzegovina and the FYR of Macedonia.

Focus on Transport Schemes

By the end of 1999, loans totalling almost EUR 11 billion had been made available for projects in twelve Central and Eastern European Countries: Estonia, Latvia, Lithuania, Poland, the Czech Republic, the Slovak Republic, Hungary, Romania, Slovenia, Bulgaria, the FYR of Macedonia and Albania. About half of the total amount went to transport projects, including 1.5 billion for the railway network. Industrial, environmental and telecommuni- cations projects absorbed around 15% each, while the remaining 6% was lent to energy schemes.

Improving the Quality of Urban Life

To join the EU, the CEECs will also have to comply with the Union’s environmental standards. Many transport and energy projects financed by the Bank have already helped to enhance the natural and urban environment. The EIB has amplified this support by financing major urban public transport schemes in Bucharest and Cracow as a contribution towards offering an alternative to the growing use of private transport. In addition, the Bank has appraised numerous municipal environmental schemes with a view to preserving or improving the quality of city life. In this context, a substantial environmental loan to the City of Budapest helped to finance replacement of obsolete and noisy trams, rehabilitation of sewerage sys- tems, construction of solid-waste incineration equipment, and the provision of parks, play- grounds and thermal baths, as well as other infrastructure to remove bottlenecks and relieve pressure on the environment.

Former Mandates expire - New Mandates approved

Both the EIB’s general EUR 3.5 billion mandate for Central and Eastern Europe and the 3.5 billion Pre-Accession Facility for the ten candidate countries in the region as well as Cyprus expired on 31 January 2000. For the period 2000 to 2006, a new mandate of 8.68 billion covering the ten applicants, as well as Albania, Bosnia-Herzegovina and the FYR of Macedonia, has been approved by the Bank’s Board of Governors. The Governors have also approved a new Pre-Accession Facility, for an indicative amount of 8.5 billion, for de- ployment in the Central and Eastern European candidates, as well as Cyprus and Malta over the period 2000 to 2003.

While annual lending in Central and Eastern Europe averaged about 1 billion over the last ten years, and over the past two years more than 2 billion, decisions already taken allow for a lending volume of 3.5 billion to 4 billion annually over the next seven years.

Combination of EU Grants and Loans, Co-financing with Development Banks

EU financial assistance to the CEECs strives to combine, in an optimal way, assistance in the form of grants and loans, thus ensuring the most effective use of banking and bud- getary resources. That combination is determined through a close working partnership between the EIB and the European Commission, which manages grant aid and pro- grammes for the region, namely PHARE, ISPA and SAPARD. Furthermore, whenever it is in the interests of the project, the EIB cofinances operations with the other multi- lateral financing institutions active in the region, in particular the European Bank for Reconstruction and Development and the World Bank.

Developing Central and Eastern European Capital Markets

As early as 1996, the EIB started to borrow on the emerging capital markets of Central Europe, issuing Euromarket bonds in Czech koruny, Slovak koruny and Estonian kroons and arranging synthetic Polish zloty operations. These bonds have helped to channel savings from Western to Central Europe. As from 1997, the EIB also introduced debt- issuance programmes in Hungarian forint, followed by Czech koruny, thereby consoli- dating its presence on the domestic market in Hungary and the Czech Republic and establishing long-term benchmarks for this market segment, while helping to channel local savings into productive projects. In general, the Bank has been in a position, whenever national regulations so allowed, to offer loans in the respective local cur- rencies and eliminate exchange risks for borrowers.

Candidate Countries: loans provided in 1999 (EUR million) Romania 396 Slovenia 375 Poland 347 Czech Republic 270 Slovak Republic 270 Hungary 170 Bulgaria 128 Latvia 98 Lithuania 84 Estonia 35

Central and Eastern

Europe 2 173

Cyprus 200

Candidate Countries* 2 373 * of which Pre-Accession Facility: 1 467 million

Loans for transport infrastructure amounted to 1 543 million, of which 55% for upgrading the road and motorway network, 32% for improvements to the railway network and 13% for urban, air and sea transport. Modernisation of railway links attracted sup- port in Poland, the Slovak Republic, Bulgaria and Lithuania, as did modernisation, exten- sion and renovation of road and motorway sections - particularly on Corridors IV and V - in Romania, Slovenia, the Czech Republic, Estonia and Cyprus.

Improving the environment and energy production

Projects to rehabilitate and extend drinking water supply systems and wastewater treat- ment facilities and to improve urban infra- structure (119 million) were financed in the Czech Republic (Prague), Bulgaria (Maritsa Valley), Latvia and Lithuania. A total of 139 million went towards construction of

combined heat and power plants in Hungary, refurbishment of a district heating system in Romania and uprating of a power station in Cyprus.

Promoting the industrial sector

In Hungary, a factory to produce injection pumps and a coking plant received 85 mil- lion, while 40 million supported construction of a car factory in Bratislava in the Slovak Republic. In addition, 312 million earmarked for the financing of small and medium-sized enterprises was advanced to partner financial institutions, i.e. banking concerns from the Union present in the region or national establishments.