The European Bank for Reconstruction and Development (EBRD) has given Romania’s railways a boost by granting a EUR 175 million loan to country’s rail operator CFR. Although the loan will not go directly to rail infrastructure, it will help CFR make urgent necessary investments by allowing the rail operator to restructure its balance sheet.

This, said the EBRD, will free up money for vital investments that will improve Romania’s rail services. “The EBRD loan is linked to CFR reform plans – to improve corporate governance and the quality of rail infrastructure and services – and will help to put the company on a more sustainable footing,” said Jean Marc Peterschmitt, Managing Director for Central and South Eastern Europe at the EBRD.

The loan will come in two chunks and is conditional: the EBRD wants to see “concrete” reforms in exchange for the cash. Specifically, the loan will support corporate governance reforms that reinforce the measures pushed by the International Monetary Fund (IMF). Also covered by the funding will be an independent review of CFR and assistance in making a restructuring action plan for the railway operator.

The EBRD has already invested in improvement work on five railway stations in Cluj-Napoca, Iasi, Constanta, Craiova and Timisoara, and financed modernization of CFR’s electricity distributor, CFR Electrificare. The EBRD has invested about EUR 500 million in the Romanian transport infrastructure sector. Overall, since the beginning of its operations in Romania, the Bank has committed about EUR 6 billion in over 300 projects in the financial, corporate, infrastructure and energy sectors, mobilizing additional investment of around EUR 11 billion.

Liam Lever, liam@romania-insider.com

(photo source: sxc.hu)