The development of local and regional economies remains one of the key challenges for the new EU member states in central and eastern Europe. The EBRD is encouraging this process through an agreement with Dexia banka Slovensko a.s. which will support long-term lending to small and medium municipalities and their municipal companies for infrastructure projects. The agreement is supported by funding from the EU PHARE programme. Long-term loans with a maturity of up to 15 years will be extended in amounts of SKK6 million (€150,000) to SKK200 million (€5 million). The EBRD will take 35 per cent of the risk of each loan up to a total of €8 million equivalent, supporting new lending by Dexia to municipalities of over €22 million. The agreement is the first signing in the Slovak Republic under the EU/EBRD Municipal Finance Facility, launched in April this year. Dexia banka will extend loans for the construction, up-grading or refurbishment of municipal infrastructure in water supply, waste-water treatment and sewerage infrastructure, solid waste, district heating systems, public roads, public parking and traffic management, public transport infrastructure and equipment for improved administration. Alex Auboeck, EBRD Director for the Slovak Republic, said the facility will provide necessary finance to small municipalities for important infrastructure development. The European Commission, through the PHARE Programme, is providing support for the programme to encourage long-term financing for infrastructure projects. As part of the programme, the European Union´s support will allow Dexia banka and the EBRD to provide grant-funded technical assistance to municipalities for project development and implementation. Press contact: Axel Reiserer, Tel: +44 20 7338 7753; E-mail: reiserea@ebrd.com