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Poland: World Bank Loans To Banks For Local Infrastructure

Washington, 11 July 1997 (RFE/RL) - The World Bank has agreed for the first time to make direct loans to two private commercial banks in Poland for lending to local municipalities.

The loans totaling about 22 million dollars are guaranteed by the government of Poland -- a requirement for the World Bank -- but are being provided to the banks, in dollars and deutschmarks, to promote private sector financing for municipal infrastructure projects in water, sewer and urban transport.

The bank says Poland's municipal infrastructure needs, including streets, drainage, water and heat supply, are huge -- around 3 percent of the entire economy (GDP) per year, especially with the backlog from the 1980s. However, local government's have barely invested half that amount in recent years, leaving the infrastructure at risk.

The banks, the General Credit Bank and the Bank for Socio-Economic Initiatives, will help raise an additional $18 million to provide the needed credits for municipal investments.