Infrastructure development across the Western Balkans gets a boost from a tripling of EU advisory work
There is a substantial public infrastructure gap in the Western Balkans, which remains an obstacle to faster private sector development, economic prosperity and integration into the European single market.
According to an International Monetary Fund analysis, average infrastructure development in the region is about 50% lower than the EU average. Existing infrastructure bottlenecks also hamper economic convergence and integration into global value chains.
Well-defined public infrastructure development, along with stronger public investment management frameworks, could considerably increase the efficiency of public spending and help leverage financial support from the European Union, international financial institutions and donors.
As indicated in the World Bank Report for the Western Balkans, past improvements in infrastructure have increased real income by around 5%, with the potential to boost it further by 7% in the case of EU accession.
The challenges of public infrastructure investment
As they work towards EU membership, countries in the region are strongly encouraged to continue upgrading their infrastructure and to swiftly introduce the necessary reforms.
However, harmonising the legal framework with that of the European Union and developing modern infrastructure both depend on the ability of countries to bring forward new strategies and projects. Limited fiscal space means that scaling up public investments can be a challenge.
Through different funding mechanisms such as the Instrument for Pre-Accession Assistance, the enlargement countries have access to EU funds even prior to becoming an EU member state.
To fully leverage this advantage, they need to have mature, well-prepared projects eligible for EU funding. Preparing these kinds of projects and equipping national project management teams with the necessary knowledge and resources are key to successfully seizing these opportunities.
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Empowering Western Balkans infrastructure project teams
International financial institutions such as the European Investment Bank can provide robust support to capital projects, not only through favourable financial conditions, but also through assistance during project selection and preparation.
To this end, the European Commission and the European Investment Bank established an advisory programme called the Joint Assistance to European Regions (JASPERS) in 2005. It’s made up of teams of over 120 experts within the European Investment Bank covering a broad range of areas. They deal with the whole project cycle, from planning to execution. To be closer to JASPERS beneficiaries, these experts work from six different locations –Luxembourg, Brussels, Bucharest, Sofia, Vienna and Warsaw.
Since its creation, JASPERS has assisted in preparing hundreds of new projects in 27 countries, helping deliver €317 billion of investment. JASPERS experts have also helped contracting authorities and project promoters build capacity to get new investments off the ground more rapidly.
The Western Balkans region has benefitted from JASPERS support before. Since 2011, its experts have helped to prepare €9 billion worth of projects.
Now, advisory support for the Western Balkans, and potentially Türkiye, will be tripled under this programme to as much as €20 million.
This increased technical assistance aims to help the Western Balkans implement more projects under the European Commission’s Economic and Investment Plan. Half of the plan has already been deployed − with close to €16 million financing for 54 projects, and €4.3 billion in grants − and its impact is visible on the ground.
Nevertheless, much more needs to be done to secure sustainable growth in the region by modernising infrastructure and increasing connectivity and climate and energy security.
Western Balkans infrastructure from preparation to execution
The value of JASPERS work lies in direct advisory support for beneficiaries to develop strategies and projects, as well as capacity strengthening and knowledge transfer.
An example of such support is the preparation of a capacity-building plan for the Albanian railway operator, resulting in the allocation of a €136 million investment grant from the Western Balkans Investment Framework. The aim is to rehabilitate 120 km of railway line between Vorë and the border with Montenegro.
In the city of Berane in Montenegro, JASPERS water experts assisted the national authorities in analysing the project documents, preparing the EU grant application and tender documentation, and implementing the wastewater project. These activities helped the city build a reliable wastewater collection and water supply system serving some 20 000 people, which brought water losses down from 75% to 42%.
Thanks to JASPERS assistance, the rehabilitation of the Iron Gate I navigational lock on the Danube River near the port of Prahovo in Serbia has been completed. Almost 50 years after the gate was built, the upgrade of the infrastructure and its operating control system means safer, more reliable and more efficient navigation along the Serbian section of the Danube River, eliminating one of the bottlenecks on the Rhine-Danube Core Network Corridor.
Djerdap navigational lock near Prahovo, Serbia
Transparency and accountability in infrastructure governance
In addition to its traditional advisory work with EU member states, in recent years JASPERS has also increased assistance for Ukraine (in close collaboration with the European Commission), Moldova and other EU Eastern Partnership countries.
Through the dedicated Facility for Eastern Partnership Investment in Connectivity, these countries have received JASPERS support to improve transport connectivity. Some examples are the strategy for EU integration of the Ukrainian and Moldovan rail systems, and the cross-border projects between Ukraine, Moldova and neighbouring member states.
The European Commission has recently adopted the Enlargement Package and the Growth plan, which entails €6 billion in grants and loans to accelerate the economic convergence of the Western Balkans.
This is a clear demonstration of EU solidarity and the commitment to bring the region closer in terms of connectivity and higher standards of living.
However, to be able to absorb these available funds, countries will have to continue building infrastructure governance capacities that cover planning, implementation and monitoring, with transparency and accountability entwined in this process.
The European Investment Bank has made its advisory teams available to help build these capacities and prioritise investment according to the country’s specific needs and those of the region as a whole, to narrow the existing infrastructure deficiencies, boost the green transition and ensure better prospects for local economies.
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This article was previously published on Bloomberg Adria
