Today, in the framework of the Brussels Georgia Donors’ Conference, the European Investment Bank (EIB) has reaffirmed its intention to support, in close cooperation with the European Commission and other international financial institutions, investments to promote economic and social progress in Georgia.

The Bank is ready to participate in co-financing the country’ significant investment needs in order to both repair the damage directly caused by the recent military operations and stimulate economic activities in the short and longer terms by developing sound infrastructure. These needs were identified in the course of the Joint Needs Assessment (JNA) in September 2008, in which the EIB actively participated.

The Bank has decided to allocate more than EUR 200 million for loans to infrastructure projects identified by the JNA for 2009 and 2010. In particular, the EIB is considering financing projects relating to the generation or transportation of energy, i.e. high-voltage transmission lines (EUR 56 million) and hydro-power plants (EUR 90 million). In addition, the EIB is looking at providing loans for the rehabilitation of railways (EUR 65 million) and reconstruction of the runway at Tbilisi airport (EUR 11 million).

The EIB expects to co-finance these investments in equal amounts with the European Bank for Reconstruction and Development (EBRD). Both banks will seek grant support from the European Commission (e.g. under the Neighbourhood Investment Fund, NIF) and other sources as and when appropriate to accompany our loans and to further soften our loan terms.

As a result of this cooperation a High-Voltage Lines project is currently being prepared. In this case, the financing plan includes a EUR 8 million grant from the EU NIF for technical assistance which has already been approved, loans of EUR 56 million each from the EBRD and the EIB, and a EUR 100 million loan from KfW Bankengruppe.

Background

The European Investment Bank (EIB), which this year is commemorating the 50th anniversary of its establishment, is the house bank of the European Union. The mission of the Bank is to support the European Union’s objectives by providing long-term loans for sound investments. In 2007, the EIB lent some EUR 48 billion for projects within the EU Member States and in countries outside the EU in which the EIB is authorised to operate. In Georgia the EIB extends loans pursuant to a decision in 2006 by the EU Finance Ministers.

The EIB is entitled to lend up to EUR 3.7 billion with a Community Guarantee to projects in Southern Caucasus, Eastern Europe and Russia. There is no ex-ante allocation of the overall amount by country; the EIB is prepared to consider support to sound projects in the areas of transport, energy, telecommunications and environmental infrastructure. The Bank has become fully operational in Georgia since October 2007 and has developed an excellent relationship with the Georgian authorities. It is currently working on the preparation of several infrastructure projects, notably in the energy sector.