Serbia’s capital city, Belgrade, will use a €70mn EBRD loan to build a bridge that will link the city’s old and new districts, significantly reducing traffic congestion and pollution levels.

The bank is syndicating €20mn to international banks, including Hypo-Alpe-Adria International, Dexia Kommunalkredit Bank and Niedersterreichische Landesbank-Hypothekenbank, giving Belgrade its first long-term investment syndication and first access to international capital markets. The full amount will be provided for a period of 15 years.

Belgrade has only two functioning road bridges connecting the old and new parts of the city. This makes parts of the city difficult to access and has resulted in traffic congestion, and noise and air pollution, which are the city’s most pressing problems. The EBRD investment will help address these problems by funding a new cable-stayed bridge with a maximum length of 380m.

Henry Russell, EBRD deputy director for municipal and environmental infrastructure, says the EBRD investment is a key part of Belgrade’s strategy to improve traffic flow, cut pollution and address a long-standing problem in the city. In addition, the syndication portion of the deal is bringing Belgrade back into the focus of international capital markets, the first time in its recent history, and also introducing the private sector into public sector projects.

The recent loan builds on cooperation between the EBRD and the City of Belgrade, which to date has benefited from €60mn in bank loans.

“Infrastructure development is the most important task for all local authorities since it improves living standards for citizens and creates new possibilities for investments”, adds Nenad Bogdanovic, mayor of the City of Belgrade.

In the last six years over €1bn has been invested in Belgrade in infrastructure development, and this latest investment for the new bridge builds on that success. The City of Belgrade received significant support in this task from the EBRD, says Bogdanovic.

The EBRD is the largest investor in Serbia, having committed over €900mn in 62 projects. Dragica Pilipovic, the bank’s director for Serbia and Montenegro, says the new bridge will have a very positive impact in the city. Commuting times will be cut, and pollution levels will fall too, she adds.

The Canadian government has provided €400,000 in technical cooperation funds for a lender’s technical monitor to advise the bank on preparation and implementation.