The streets and tram tracks of Arad will soon have the chance to catch up with the charming buildings of this picturesque city in western Romania.

To help improve its transport infrastructure – which will benefit businesses, residents and tourists – the EBRD is lending Arad €20mn in what will be the bank’s first non-sovereign loan dedicated to urban transport in the country.

The loan will help improve roads and upgrade the tram lines running from the north to the south of the city, improving safety, efficiency, and customer service.

Technical cooperation funds from the Italian government will also help fund the commercialisation of the city’s transport sector and promote the greater involvement of private companies in its operations.

A portion of the loan is being syndicated to Dexia Kommunalkredit Bank, an Austrian-based bank which provides financing to local authorities, municipalities and municipal associations in central and eastern Europe

We have been working with municipalities in Romania since 1995 to develop the water and wastewater sector, says Gavin Anderson, EBRD business group director for infrastructure. Urban transport investment has also become increasingly urgent in recent years.

Arad is the bank’s first project of this type in the country and we expect it to be the first of many, Anderson adds.

With its close proximity to Hungary, Arad is benefiting from foreign investment that is helping to support its already growing economy, with many industries ranging from the production of train wagons and automobile parts, to agribusiness, toys and clothes production located in the area. Anderson adds that this makes Arad a success story, which has to be largely attributed to the Mayor and his team.

Arad’s strong economy is a result of good local businesses and growing foreign investment, focussed around the city’s innovative industrial zones. What remains is the need to support the activities and needs of local companies and residents with improved public services, among which transport is certainly paramount, Anderson says. The EBRD has a good reputation for working with local municipalities in Romania, and we want to build on that, he adds.