EBRD LENDS 180 MILLION EUROS FOR MAIN HIGHWAY IN BOSNIA

SARAJEVO, Bosnia (October 28,2008) - The European Bank for Reconstruction and Development (EBRD) is investing in the largest infrastructure project in Bosnia to date by lending 180 million Euros to the state of Bosnia to construct key sections of the Trans-European Corridor Vc.

A key transport artery linking Bosnia with the rest of Europe, Corridor Vc starts in Budapest, Hungary and ends in the Adriatic Port of Ploce in Croatia. It runs north to south through the centre of Bosnia, and is the most strategically important link for regional trade and economic development.

The 180 million Euros EBRD finance is part of an overall 480 million Euros investment in the priority highway sections on Corridor Vc, which will be co-financed with the European Investment Bank. The priority sections include a 15.2 km section from Drivusa to Kakanj, 18.9km from Vlakovo to Tarcin, 21.4km from Pocitelj to southern border with Croatia and 10.9km from Odzak to the northern border with Croatia.

As part of the project, the EBRD is also providing institutional support to the recently established highway directorate (FBHMD) and for the development of subsequent sections of Corridor Vc using private finance.

Technical assistance is being provided by the donors of the EBRD-Western Balkans Fund* to the amount of 500,000 Euros for institutional support, 80,000 Euros by the Central European Initiative for preparation of a resettlement action plan and a 500,000 Euros by EU’s Infrastructure Preparation Facility for project implementation.

Signing the project, Peter Reiniger, EBRD’s Business Group Director for Central Europe and the southeastern Europe, said that as the largest infrastructure investment in Bosnia so far, Corridor Vc will play a key role not only in providing a financial boost to the development of the Bosnian economy, but it will also have significant impact on the region. As well as connecting towns and cities, the improved road infrastructure will support trade and development and make the country and the region more attractive for investment, Mr Reiniger added.

Dragan Vrankic, the Bosnian Minister of Finance and Treasury, said that the introduction of a fuel levy for highways, which already exists in some countries in the region, as a source of repayment, will not only enable debt to be serviced for this project, but also attract private investors for the construction of the remaining sections.

Sue Barrett, EBRD’s Director for Transport, emphasized the Bank’s continued commitment to supporting the development of the transport sector in Bosnia and noted the significant impact this latest road project will have on institutional reform and encouraging greater involvement of the private sector in improving the country’s road network.

Bozo Ljubic, the Bosnian Minister of Communications and Transport, emphasized that this project is a major step in Bosnia’s integration into the regional transport network and that it demonstrates the ability of Bosnia to embark upon large scale investments in the context of the EU accession.

To date, the Bank has invested more than 270 million Euros in the transport sector in Bosnia, including 23 million Euros for post-war emergency road repair in 1996, 70 million Euros for the construction of a key regional road network in 2004 and 75 million Euros for road maintenance and rehabilitation of a key primary road network in 2007.

The EBRD is the largest institutional investor in Bosnia, having invested 779 million Euros in 70 projects in a number of important sectors, including national and municipal infrastructure, the financial sector and the private corporate sector, including small and medium size enterprises.
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