Czech Republic and EIB sign a Memorandum on financing railway infrastructure construction10/11/2022|Press releasesThe possibility of using European Investment Bank (EIB) funds for the construction of transport infrastructure has been confirmed by a Memorandum of Understanding between the Czech Republic and the European Investment Bank. EIB's financial and technical support will be aimed at financing railway projects between 2023 and 2027 up to a maximum of EUR 7 billion. The ministers of finance and transport, Zbyněk Stanjura and Martin Kupka, signed a Memorandum of Understanding between the Czech Republic and the EIB in Prague with Lilyana Pavlova, Vice President of the EIB European Investment Bankwhose purpose is to establish a framework for upcoming cooperation between the two parties in relation to the financial and technical support needed for the establishment of strategic railway infrastructure projects in the Czech Republic. The signing of the memorandum followed a meeting between ministers Zbyněk Stanjura and Martin Kupka at the EIB headquarters in Luxembourg. "The need for investment in transport infrastructure exceeds the current possibilities of the state budget, which is why we have announced that we will supplement it with other financing instruments, such as loans from the EIB. We are concluding the memorandum because we want to cooperate with the EIB in the long term with a view to the upcoming construction of the Czech high-speed rail network," says transport minister Martin Kupka. Following the adoption of the Memorandum, a loan agreement between the Czech Republic (Ministry of Finance) and the EIB is expected to be signed as well as a loan agreement between the Ministry of Finance and The State Fund for Transport Infrastructure (SFDI). The loan should be granted to the Czech Republic represented by the Ministry of Finance and transferred to the SFDI. "We have taken another important step towards being able to draw attractive loans from the European Investment Bank over the next five years, the first one for almost CZK 25 billion already next year. Themoney should be directed to investments in digitalisation and automation of railway transport, electrification of railway lines and support for regional transport," says finance minister Zbyněk Stanjura and adds: "I consider it highly beneficial and cost-effective to optimise the state's debt instruments in the current turbulent times. In view of the volatility on the financial markets we expect the terms of the loan to be more favourable compared to standard state financing instruments." Next Generation EU EIB financing will be used, under the Memorandum, for co-financing and complementing the European Union resources available under the programme Next Generation EU and the financial framework 2021-2027, in particular Recovery and Resilience Facility (RRF), The Operational Programme Transport 2021-2027 and Connecting Europe Facility (CEF). EIB Vice President Lilyana Pavlova said: "The Memorandum of Understanding we have signed will enable us to work together to find the most effective models for EIB's involvement in Czech government's plans for the modernisation of the national rail network. The EIB wants to further intensify our existing support for the modernisation of the railway network in the Czech Republic and contribute to safer, greener and more reliable transport alternatives that can benefit Czech citizens and businesses alike. We believe this is crucial for the sustainable and long-term economic and social development of the country and the EU. This memorandum underlines the EIB's role as a reliable partner on which the Czech Republic can continue to rely in building a sustainable and green future for its citizens." The key step towards economic recovery Big projects such as major rail corridors and hubs will be prioritised for support through individual EIB loans TEN-Twhere the infrastructure is electrified, where electrification is planned within ten years or where the infrastructure will be adapted for zero-carbon train operation within ten years. Until 2030, these resources can also support rail lines of regional importance where the infrastructure is not electrified as well as investments in digitisation and automation to optimise the use of rail capacity and improve safety and interoperability. It will also enable integration and connectivity between the different modes of transport in the transport system. The government sees investment in transport infrastructure as one of the key steps to revive the current economy, which has been hit by high inflation and rising energy prices. The budget of the State Fund for Transport Infrastructure (SFDI), approved by the Government in the record amount of CZK 150.9 billion, corresponds to this. A portion of the budget – CZK 30.7 billion – will be secured by a loan from the European Investment Bank and also through bonds issued by SFDI. The structure and parameters of this funding will be submitted to the Government for approval.