A rail link to the Bulgaria border boosts North Macedonia’s economy and keeps it on track for EU accession

Since the Nineteenth Century, rail planners have dreamed of a route from northern Germany across central Europe to the Bulgarian Black Sea coast. But the dream has long had a missing link. Now, North Macedonia is plugging the gap.

The country aims to complete an 89 km connection from Kumanovo to the Bulgarian border by the end of this decade. The new line is backed by a range of EU financing.

“The European Union is supporting North Macedonia in developing a functional and modern railway system, which will provide better connectivity, quality of life and increased economic development opportunities for citizens,” said David Geer, head of the EU delegation to North Macedonia.

“Integrating railway connections into North Macedonia’s transport network is one of the European Union's priorities, because it will ensure efficient climate-friendly movement for people and freight across the European continent.”

Developing a functional and modern railway

Construction of the first 31 km section between the cities of Kumanovo and Beljakovce started in 2022, followed by the new rail link from Beljakovce to Kriva Palanka. In December 2023, the European Union announced the financial package for the final phase of the Eastern section of rail Corridor VIII from Kriva Palanka to Deve Bair on the Bulgarian border. This will include the electrification of the 88 km section from Kumanovo to the border.

“Funds the government of North Macedonia has been provided from the European Investment Bank and European Bank for Reconstruction and Development — as well as a grant from the European Union — are unquestionably crucial for completing this project,” said Fatmir Besimi, North Macedonia’s minister of finance.

“Its implementation will create better working conditions for companies, enable easier transport of goods and passengers, and encourage development,” he added.

Big rail financing for North Macedonia link

For this pivotal rail route, €560 million has been secured under the auspices of Team Europe. The funds entail a €175 million loan from EIB Global and another loan of equal size from the European Bank for Reconstruction and Development. These loans will be complemented by a €150 million EU grant through the Western Balkans Investment Framework and a grant of as much as €60 million from the Instrument for Pre-accession Assistance. The project forms part of the Global Gateway, the European Union’s strategy that aims at narrowing the global investment gap for vital infrastructure.

The project will continue to benefit from European Union and European Investment Bank technical support, which includes assistance through the JASPERS programme to ensure that preparation, tendering and execution are in line with EU standards. The technical assistance also increases the local project implementation team’s capacity.

“By providing €365 million, we are proud to act as a leading financial institution for this project that entails the largest-ever EU grant to North Macedonia under the Western Balkans Investment Framework,” said Kyriacos Kakouris, the European Investment Bank vice president responsible for the region. “It is a good example of the variety of financial and technical support that the Bank provides.”

Higher efficiency and quality of service in the rail sector

The improvement in implementation capacity – as well as the new lines – will set the foundation of a modern railway system in North Macedonia that fosters cooperation and open competition within the regional and EU transport networks. The recent adoption of amendments to the Railway System Law in the country will contribute to these efforts with higher efficiency, quality of service and competition in the rail sector. In turn, that leads to more investment.

The new connection will transport about 500 000 tonnes of freight and half a million passengers a year, improving the connectivity of the regions along the line and significantly reducing freight transport costs.

“Upon completion, it will efficiently facilitate international movement of goods and people,” said Jürgen Rigterink, first vice president of the European Bank for Reconstruction and Development, “reducing the distance by rail to the Black Sea and Türkiye by about 200 kilometres.”

New direction for country with 150-year rail tradition

The increased use of railways is an important step towards climate sustainability, because they account for less than 1% of transport-related gas emissions. (Take a look at Sections 3.2.12 and 3.2.14 of the European Union’s Statistical Pocket Book on transport). Transport typically ranks as second- or third-largest contributor to air pollution in Western Balkan cities, which are amongst the most polluted in Europe. New, modern railways will promote a shift from road to rail and contribute to a more environmentally sustainable transport system. This is in line with the EU’s Green Agenda and the Sustainable and Smart Mobility Strategy, which aim to reduce transport emissions by 90% by 2050.

For a country that opened its first railway in 1873 between Thessaloniki and Skopje and which now has 700km of lines, North Macedonia sees this sector as a priority in achieving its climate and connectivity goals. It’s also an important step on its path to EU accession.