Contacts:
In Belgrade: Vesna Kostic, (+381) 30 23 723
vkostic@worldbank.org

In Washington: In Washington: Michael Jones, (202) 468-5232
mjones2@worldbank.org

Belgrade, July 9, 2009—The World Bank Board of Executive Directors approved a $388 million loan today to Serbia for the Corridor X Highway Project. The project will build three missing links on the Corridor X highway, improve road safety and support better management in the transport sector. This loan is the largest ever World Bank loan to Serbia.

The road network in Serbia represents a major asset for the country, but the condition of the network is far below European standards. In international comparisons, Serbia has scored poorly in terms of the quality of its infrastructure. In terms of road infrastructure more specifically, a recent survey, financed by the World Bank, revealed that whilst one third of the road network is in good condition, primarily the main and regional roads, over half the road network is in poor or very poor condition.

In addition, the level of injuries and fatalities caused by traffic accidents is tragically a growing social and economic cost for the country. The latest available data for 2008 shows a total of 16,651 road accidents on Serbia roads, involving nearly 900 fatalities, and over 22,000 injuries. Serbia’s road safety performance is over five times worse than the best performing EU countries.

This program will make a major difference both to the users of the road, with faster, safer journeys, and the people who live along the roads, removing the danger of high levels of traffic from the center of communities, improving access to essential social services, and increasing employment opportunities.

"The Corridor X Highway Project will reduce the cost of transport for all goods, thereby reducing the cost of imports and will also contribute to making exports more competitive,” said Richard Martin Humphreys, the Task Team Leader for the project. “The project will make a major difference both to the users of the road, providing faster, safer journeys, and the people who live along the roads, removing the danger of high levels of traffic from the center of communities, improving access to essential social services, and providing employment opportunities."

The government recognized the integration of the Serbian transport network with the core regional network as a key policy objective for the economic and social development of the country.

"In these difficult times, the program will make a significant contribution to the Serbian Economy," added Simon Gray, the World Bank country Manager in Serbia. "This investment will support employment, both directly in the construction phase and indirectly through increased capital expenditures in the Serbian economy. It will ensure that Serbian construction companies adversely affected by the international economic crisis have a chance to increase activity and it will indirectly benefit numerous small businesses in Serbia and in the region and more widely."

The Project will consist of four components:

• Component 1 - The M-1 road to FYR of Macedonia (E-75) – Corridor Xd. This component involves the construction of two sections of motorway totaling 31.9 km between Grabovnica and Grdelica (5.6km), and between Vladicin Han and Donji Neradovac (26.4km) (Corridor Xd);
• Component 2 - The M 1-12 Road to Bulgaria (E-80) – Niš – Dimitrovgrad - Corridor Xc. This component involves the construction of 8.67 km of motorway around Dimitrovgrad;
• Component 3 - Road Safety: This component will support the implementation of the new Road Safety Law (passed 29 May) in the establishment of a Lead Agency, the development of a national road safety strategy, and the creation of a road safety performance framework; and
• Component 4 - Implementation Assistance and Institutional Support: This component will provide support to implementation, including the supervision of the civil works, the supervision of the environmental and expropriation aspects of the project, and other necessary operational expenses.

With the full agreement of counterparts, this project also introduces the innovative step of two layers of technical audit to ensure the quality of the works – one supported by the loan and one paid directly by the Bank – to ensure that the money from the loan is spent on what it is meant to be. Further technical assistance will be provided to develop a reform action plan for the reform of the Public Enterprise Putevi Srbije, and after Government approval, the necessary support to implement it, to improve the management of the sector.