The European Investment Bank (EIB) is providing a USD 160 million loan to the People’s Republic of China (PRC) to contribute to the financing of the reconstruction plan set up by the Chinese government for the areas hit by the May 2008 Sichuan earthquake. The finance contract was signed on 14th April 2009 by PRC’s Vice Minister of Finance Li Yong and EIB’s Vice-president Carlos Costa.
The loan will be dedicated to the restoration of pre-existing forestry ecosystems destroyed by landslides, concerning some 100 000 ha of forest, and for consolidation works in irrigation and drinking water reservoirs, concerning 528 dams. The European Commission is also involved in this plan, together with other multilateral institutions, such as the World Bank, the Asian Development Bank and the International Fund for Agricultural Development. This operation is a good example of international cooperation and coordination in the implementation of a major reconstruction programme. In particular, the EIB facility will complement the grants provided by the European Commission.
The support for the reforestation component of the investment programme is in line with EU’s policy to mitigate climate change, while the reservoir repair component will contribute to promote natural resources management. The repair of reservoirs is necessary to ensure appropriate supply of both drinking water and water for agricultural production, and is therefore a high economic priority. Both components of the EIB supported programme will contribute to environmental sustainability, one of the core objectives of the Bank’s external lending mandate in Asia.
Background:
The European Investment Bank is the EU’s long-term financing institution promoting European objectives. Set up in 1958, the EIB operates in the 27 EU Member States and more than 130 other countries in Asia and Latin America, Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific. Lending operations outside the EU are part of the EU co-operation policy with third countries.
Under the current Asia and Latin America mandate (ALA IV), covering the period 2007-2013, the EIB is authorised to lend up to EUR 3.8 billion for financing operations that contribute to climate change mitigation or to support the EU presence in those regions through Foreign Direct Investment, transfer of technology and know-how. The EUR 3.8 billion regional ceiling is broken down into indicative sub-ceilings of EUR 1 billion for Asia and EUR 2.8 billion for Latin America.