Dexia Kommunalkredit Bank, the Vienna-based lender oriented toward financing for the banking sector, and Bulgaria's state-run Encouragement Bank struck a framework agreement on financing projects in the public sector on March 19.

The agreement covers infrastructure, energy and energy efficiency, health care, education and social sector projects.

Chief executive of the Bulgarian arm of Dexia Kommunalkredit Damian Damianov said this was the first agreement with as broad a scope.

The two banks reached their first co-operation agreement last year when Dexia extended a 10 million euro credit line to finance investment projects of small and medium enterprises, as well as public institutions and enterprises.

Later in 2007, the Encouragement Bank alongside Dexia Kommunalkredit Bank and Irish Depfa Bank organised and placed the largest corporate bond issue of Bulgarian State Railways (BDZ) worth 120 million euro.

As reported earlier by The Sofia Echo, the Encouragement Bank will shortly transform into the Bulgarian Development Bank (BDB). The bill on the set-up of BDB passed first reading last week despite broad resistance of opposition politicians and experts.