The European Investment Bank (EIB), the European Union's long-term credit institution, provides a EUR 40 million loan to the State of Bosnia and Herzegovina for the rehabilitation of railway infrastructure and modernisation of railway sections of Pan-European corridors Vc and Parallel to Corridor X, linking Bosnia and Herzegovina to Croatia, the Federal Republic of Yugoslavia and the Adriatic Sea. 

The project focuses on priority investments on selected railway sections of track, bridges, tunnels, stations and workshops. Being important for the reconstruction and development of the Western Balkan region, the project is listed in the Near-Term operations under the Stability Pact, where the EIB plays an important role. 

As for most of the other countries in the region, the effects of regional conflicts, have been to the detriment of organised transport means. Being linked to a railway project in Croatia, also financed by the EIB, the project will contribute to improved services on an important transit corridor, assisting the integration of the country with its neighbours in South-Eastern Europe and with the European Union. 

The EIB loan carrying a 2% interest rate subsidy provided by the EU budget, is granted under the EUR 100 million Special Mandate (1998-June 2001) for transport, energy and environment projects, which has been fully utilised for the present project, and a EUR 60 million loan signed in March 2000 for three road schemes, including a new express by-pass around Sarajevo, a bridge on the Neretva river at Capljina and the rehabilitation of various stretches of roads of national and international importance.

The project represents a joint operation between the EIB and the EBRD, resulting in a commonly supported definition of priority investments and a locked up funding plan that also includes the European Commission Canada and Japan.

A central Project Implementation Unit (PIU) will be set up at the level of the Bosnia and Herzegovina Railways Public Corporation (BHRPC) that should coordinate the overall smooth implementation of the project. The BHRPC, which was established in 1998, is the umbrella organisation for all stakeholders in the railway sector.

The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects which further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries. In South-East Europe, the EIB operates under the Mandate for Central and Eastern Europe agreed by the Council of Ministers for 2000 to 2007, which provides for EIB lending of up to EUR 8.7 billion, which complements the EU, as well as EU Member States' own bilateral co-operation policies. To underline its commitment to future post-war reconstruction in the Balkan area, the EIB played an active role in the preparation phase of the reconstruction investment programme, in cooperation with the European Commission and the other multilateral financing institutions. The list of potential infrastructure projects which was published in the Study on Basic Infrastructure Investment in South-Eastern Europe comprises a total of 85 projects totalling EUR 4 billion. Of this total 35 projects are Quick-Start totalling EUR 1.1 billion, in which the EIB has a lead role in 14, totalling EUR 720 million, ie 65% of the total. 50 projects are "Near-Start", totalling some EUR 3 billion, of which EIB has a lead role in 18, amounting to some EUR 1 billion, ie 33% of the total Near-Start package. Since resuming lending operations in Bosnia and Herzegovina in 2000, total EIB financing in the country amounts to EUR 120 million for roads, rail and electricity distribution.

(1) 1 EUR : 0.621700 GBP; 1.95583 DEM