Dubravka Negre, Head of the Western Balkan Regional Office of the European Investment Bank (EIB): Good infrastructure leads to new investments

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EIB has been active in Serbia and Belgrade since 2001 and our up to date cooperation with the City of Belgrade authorities has been very successful. In the future we are ready to support City’s development plans, from the landfield in Vinca to waste water treatment plant, as well as further PPP development and the energy efficiency

We spoke with Dubravka Negre Head of the Western Balkan Regional Office of the European Investment Bank (EIB) about the reform processes in the Western Balkan and Serbia, EIB support to the development of the country’s infrastructure and its cooperation with the City of Belgrade.

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How would you define Serbia’s role in the region in terms of the pace of the reforms and the EU integration process?

— Serbia, as all countries of the Western Balkans, is in the EU integration process and implementation of the structural reforms is of a paramount importance. Over the last two years the Government has stabilized public finances and established a roadmap for restructuring public administration and state owned companies. It would be desirable that the Government looks further at ways to introduce measures to promote growth, in particular paying attention to improve the business environment which may attract higher levels of FDIs. Opening of the chapter 23 in the negotiation process on the rule of law and completing it will certainly raise confidence amongst investors. It is also needed to further progress in the implementation of the non-performing loan (NLP) resolution strategy adopted in August 2015 which should help to remove barriers to clean banks’ balance sheets and unlock lending. Insolvency framework should be strengthened further and improve secured creditors rights with strengthening of the judiciary system, among other efforts.

How much are other regional countries willing to join the initiatives for infrastructural linking in the region and creating a single market in the Western Balkans?

— EIB is supporting the Connectivity Agenda and we already have a lot of regional projects identified some of which are planning to go ahead and start imple mentation next year in Bosnia, Montenegro and Serbia mostly in the road and rail sector. Those projects will contribute to connect people and countries of the Western Balkans and are very important from the connectivity and regional cooperation point of view which are also important for the EU integration process.

At this moment, Serbia has several pending infrastructure projects. How could these projects contribute to sustainable economic growth?

— Well-designed infrastructure is essential for the success of a competitive modern economy. Infrastructure development in transportation, communication, water, and energy networks can raise country’s productivity, foster economic growth and consequently improve living standards. The accessibility and quality of infrastructure determines the country’s attractiveness to foreign investors. To that end, the continuation of building up Serbia’s infrastructure, such as transport, energy, municipal infrastructure, health, education are all equally important. The EIB’s support to the country started in 2001 and today we are the largest lender to the economy with EUR 4.7 billion of the committed financing. We are financing the construction of motorways and by-passes, rehabilitating the national road and railway networks, refurbishing and building of new schools, hospitals, judiciary facilities, municipal infrastructure, as well as providing support to the scientific community through our research and development loan programme. Significant funding has already been channeled into those sectors and we still have numerous ongoing projects where significant funds are to be released. In the future, we intend to widen further our lending activities to sectors such as renewable energy and energy efficiency and the environment which have a positive impact on climate change and Serbia’s further economic and social development.

EIB is one of the investors in infrastructure. After certain delays, are you now satisfied with how Serbia manages large-scale projects?

— Serbia is in the EU integration process and several chapters in the negotiation process have been opened and legislation being aligned with the EU acquis which is expected to further facilitate EIB activi-ties in Serbia. The EIB operates in the Western Balkans under the mandate from the European Commission. We are a triple AAA credit rating institution and we evaluate risks thoroughly before investments are proposed for approval to our governing bodies. Although there were projects that faced some difficulties during their implementation in the past, we continue to closely monitor our operations and work hand in hand with all project stakeholders to successfuly resolve all project issues.

Belgrade has recently presented its project portfolio that has several large-scale infrastructure endeavours. Which of these is the most appealing to the EIB?

— The EIB has been cooperating with the City of Belgrade since 2001, and we have financed several municipal investments in Belgrade, from streets and boulevard reconstruction (such as Bulevar Kralja Aleksandra, Vojvode Stepe street, etc.) to access roads of the new Sava Bridge and the reconstruction of the Gazela bridge itself. In the future we are ready to support City’s development plans, from the landfield in Vinca that we are closely following to waste water treatment plant, more infrastructure projects such as bridges reconstruction to further PPP development but also to support projects in the energy efficiency. We also have advisory services inside the Bank (for PPP institutional or project development through epec for example) as well as technical assistance and we are exploring future areas of cooperation together with the City of Belgrade, but also with other municipalities in Serbia.

Do you think that the credit rating that Belgrade got assigned to recently would improve the city’s image with investors, and what can be done locally for Belgrade to become an even more interesting investment location?

— The credit rating of the City assigned by Moody’s which is equivalent to the sovereign rating is a very positive sign for further investments and especially private sector involvement in the City’s projects. I believe that a development of a well structured PPP as well as further strengthening of ppp institutional framework will allow the City to further explore this type of infrastructure financing which will allow for more sophisticated financial product development and more fiscal space for the future in the City’s budget.

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