The role of railways in building the European and national budget

The railways play a very important role in increasing the state budget and investments in strategic railway infrastructures bring major benefits to the entire region. This is the opinion of the European Union expressed within the strategies launched to stimulate the economic recovery and, consequently, member states are trying to implement strategies based on investments in railway infrastructure, believing in their contribution to the national budget, especially through the return of investments. Under the circumstances, business opportunities are created and investors are encouraged to finance projects. Therefore, infrastructure investment growth support the economic recovery by creating an environment favourable to private investors.

All countries are aware of the fact that investments stimulate the economic recovery, while in the case of transport infrastructure investments, the situation is clear as crystal: speeding up financing for transport projects provides new opportunities for the private sector and a high return of investments, compared to other sectors, established and maintains cooperation and ensures a permanent flow in domestic and external trade activities. Increasing investments in public infrastructure supports the economic recovery as it generates a positive multiplying effect on the short term and can improve national competitiveness on the long term. Also, railway infrastructure investments create jobs, thus contributing in counteracting the negative effects of the economic downturn.
Based on these aspects, the transport infrastructure, especially railways, is vital in the activity of every country as it provides an efficient and environmentally friendly transport.
However, the railways cannot help increase the budget without being financially supported with public and private contributions. At EU level, there are still gaps in covering infrastructure project financing and, therefore, the European Union plans optimising the use of these financial contributions so that projects underway could be efficiently carried out. According to current financial prospects (2007-2013), TEN-T infrastructure projects are financed from member states’ budget with EUR 196 Billion based on the support of EU instruments. EIB’s contribution is also significant, the institution granting EUR 65 Billion to infrastructures. “The European Union’s contribution amount to only EUR 65 Billion, while necessary investments are estimated at EUR 350 Billion, resulting in a worrying financing deficit. The implementation of public financing in each member state and within the EU is not as efficient as it could be”, points out the European Transport Commissioner, Siim Kallas.
Thus, the European Commission believes that the financial measures adopted within the Union must be part of a clear financing strategy, which generates an improved coordination of available financing sources and increased added value in carrying out projects.

Romania must focus on infrastructure investments

Romania has to implement infrastructure projects as soon as possible in order to absorb EU funds estimated at EUR 5.7 Billion by 2013 against the state budget funds estimated at EUR 1 Billion. By the end of 2010, Romania should submit to approval projects worth EUR 2 Billion. Currently, approved  projects are totalling EUR 1 Billion. Moreover, for the time frame 2014-2020, the Romanian Ministry of Transport is expecting a EU financing that would at least equal that of the 2007-2013 programme. The railway infrastructure needs massive investments to carry out projects, so Romania authorities should prioritize investments in order to be able to find solutions for unblocking the absorption of EU funds. The lack of funds determines the fate of railways, and Romania has to come up with a strategy for long-term investments. Since Romania is still struggling to counteract the effects of the economic crisis, the authorities must grant important amounts of money to infrastructure development in order to turn into account the country’s potential.
The railway infrastructure development projects in Romania require investments that exceed EUR 7 Billion. Over the next period, the infrastructure manager plans to attract EUR 2.7 Billion for infrastructure projects and for 2011, the Transport Ministry announced that the money necessary to finalize the modernisation of Corridor 4 will be allocated.
If the European Union is aware of the crucial role that the railways play in the economic growth, then the national authorities should prioritise infrastructure investments by initiating projects and seeking financing solutions. This is the way in which the infrastructure could develop, as well as the related industry, and consequently the entire private sector which contributes to the national budget growth. The impact of infrastructure projects on the market, the role of railways in building the national budget, as well as the political factor in increasing the level of investments, are few of the topics debated within the Club Feroviar Conference, held during February 23-24, 2011.

by Pamela Luică


Share on:
Facebooktwitterlinkedinmail

 

RECOMMENDED EVENT: