INTERVIEW – Global Financial Crisis Will Not Affect EIB Lending in Western Balkans

“As a rule, we can finance only 50% of the investment cost. So we need other co-financing, which may be other IFIs acting in the region, in particular the European Bank for Reconstruction and Development (EBRD), or the European Commission or other bilateral donors. These sources of funding should not be affected by the situation on the financial markets,” Dominique Courbin, EIB Head of Division for Slovenia, Croatia and the Western Balkans, told SeeNews in a recent interview.

“I expect the commitments made by various authorities to be met and the investment programmes to continue as planned,” he added.

The Western Balkans is the European Union jargon for the countries of the former Yugoslav Federation less Slovenia plus Albania. The EIB has a separate portfolio for Croatia.

Courbin said the EIB borrows the bulk of the money that it uses for on-lending on the financial markets, in the form of bonds. “This year we have a borrowing programme which is close to 60 billion euro ($76.9 billion). This borrowing programme is well advanced and there is no reason to expect any difficulty in raising those 60 billion.”

Part of the EIB financing under the bank's programmes for the European Union candidates and potential candidates is guaranteed by the European Commission. The EIB also has a special pre-accession lending facility of its own.

Courbin said the EIB hopes its project portfolio in the Western Balkans and Croatia for 2008 and 2009 will be at least at the level of 2007, or some 770 million euro. Figures from the bank show that its lending to the Western Balkans since 2002 totals 2.0 billion euro. In Croatia, EIB lending since 2002 has been some 1.2 billion euro.

“We are demand-driven, we act case-by-case. Of course, annually we do have targets. But this target during the year may be exceeded in some countries and may not be reached in other countries for particular reasons,” he said.

He said one drawback for EIB projects in the Western Balkans has proved to be of political nature, namely when there is an election cycle. He gave Serbia as an example, where a series of  presidential, legislative and local elections slowed down project implementation this year.

Courbin said the EIB’s priorities in the region would remain in infrastructure – roads and motorways, transport, but also energy production, transmission and distribution. He said the Serbian and Montenegrin governments have announced big plans for motorway construction, hoping to get the support of the EIB and other IFIs for them.

“We are following very closely these processes,” he said.

In Bosnia the bank hopes to sign by the end of the year a 75 million euro loan for the construction of sections of a major north-to-south motorway across the country which will run along the EU-defined Corridor Vc, linking Budapest with the Croatian Adriatic coast.

“What is of greater importance now concerns environment and more specifically water and sanitation investments,” Courbin said, adding the EIB has recently signed loans in this area in Bosnia and Montenegro and will develop these programmes in the future.

($ = 0.7802 euro)