Loan boost for Bosnian infrastructure

Date: 05/03/1998

By Tim Jones

EU FINANCE ministers look set to approve soft loans worth 100 million ecu to rebuild war-ravaged Bosnian infrastructure, albeit with strings attached.

If the call for a new lending mandate for the European Investment Bank (EIB) is endorsed by ministers next Monday (9 March), it will be a victory for Bonn, which championed the idea.

A report by the European Commission and the EIB has concluded that loans could be made to improve basic infrastructure - roads and railways, energy, water sanitation, sewage treatment, gas and telecommunications - but this would require a substantial interest rate subsidy.

The EIB lends for investment at the low end of market rates since it is a trusted international borrower, but even this would be too high for war-torn Bosnia to repay, claims the report.

The mandate approved for the Former Yugoslav Republic of Macedonia (FYROM), which took effect in January, is worth 150 million ecu over three years, with a 2&percent; interest rate subsidy for transport projects. The EIB believes ministers will have to find money from the Union budget to hack at least 3&percent; off the rate Bosnia would have to pay.