The EBRD has joined forces with the European Investment Bank to finance projects in countries to the east of the European Union, leveraging significant EU funds for the eastern neighbours' and potentially Central Asia with the EBRD's experience of project financing in the region.

The EBRD will co-finance EIB transactions in Russia, Ukraine, Moldova and the Southern Caucasus, as well as, depending on a new decision of the Council, in Central Asia. The EIB has been authorised by the EU Council to extend loans that could exceed EUR 3.7 billion until 2013 (or about EUR 500 million per year) for co-financing investment projects in this region.

The EIB and the EBRD will work together to identify projects that meet the EU priority of financing major infrastructure. Transactions will be structured and negotiated jointly by both institutions, drawing on the EBRD's particular expertise and long experience working in the region. The EBRD will share the risk by providing up to 50 percent of the financing for each joint project, and all transactions will have to meet both EIB and EBRD conditions, including integrity, sound reporting, environmental standards and transition impact.

EIB President Philippe Maystadt said that region covered by the agreement is critical because it includes the countries that are close neighbours of the EU, all of which need modern infrastructure that will boost economic development as well as fostering regional ties amongst countries within the region and with the EU. He said the most efficient way to undertake these large infrastructure projects is in partnership with the EBRD, which already has deep knowledge of the region.

EBRD President Jean Lemierre characterised the arrangement as a positive example of co-operation between international financial institutions, with the EIB and the EBRD each contributing to the high standards and efficiency of projects in a way that will bring the greatest value to people in countries that are in transition to full market economies. He commended the EIB's approach of fostering co-operation rather than competition between international institutions.

The European Commission has set projects involving transport, energy, telecommunications and environmental infrastructure as main priorities for the EIB in this region. Particular priority should be given to projects that will extend the trans-European networks and promote regional integration.

The co-financing arrangements are detailed in a Memorandum of Understanding to be signed before the end of the year between the European Commission, the EIB and the EBRD.