Bosnia Gets 150 Million-Euro EBRD Loan for Road Upgrade

Bosnia-Herzegovina obtained a 150 million-euro ($198 million) loan from the European Bank for Reconstruction and Development to build a highway that will boost the Balkan nation’s economy.

The 15-year loan will help finance part of the construction of the Banja Luka-Doboj highway in western Bosnia. The European Investment Bank, the financing arm of the European Union, will also take part in funding the project, the London-based EBRD said in an e-mailed statement today.

“Modern infrastructure is imperative for the economic growth and regional integration of Bosnia,” EBRD Transport Director Sue Barrett said in the statement. “Today’s signing in Banja Luka is an important milestone for the development of transport infrastructure in Republika Srpska.”

Bosnia-Herzegovina, the former Yugoslav nation most hurt by the ethnic wars in the 1990s, wants to rebuild its infrastructure to improve transport links with neighboring Croatia, Serbia and Montenegro, and boost its economic output.

The nation is divided into two entities, the Serb-dominated Republika Srpska and Croat-Muslim Federation, with many roads between the two still awaiting repairs and upgrades.

The borrower is JP Autoputevi Republike Srpske, the public company in the Serb-dominated part, while the funding is guaranteed by Bosnia-Herzegovina, Ina Coretchi, the spokeswoman for the lender said in an e-mail today.

The EBRD, established to help former communist nations’ transition to a market economy, has committed 1.3 billion euros to Bosnia-Herzegovina since it began operations in the country.

Moody’s Investors Service, which on April 3 lowered the country’s government bond ratings one level to B3, expects the Bosnian economy to slide into a recession again this year on faltering investments from abroad, the debt crisis in Europe and political tensions between the nations.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE