The Balkans, particularly the six Western Balkan economies of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, are entering a phase of intensified efforts to close long-standing infrastructure gaps. Two driving forces are especially visible. The first is the European Union’s agenda of connecting the region more closely with the EU single market and the TEN-T transport network, as well as aligning it with EU climate and energy objectives. The second is the growing role of financial instruments that combine grants with loans in order to make large projects bankable, notably through the Western Balkans Investment Framework and the involvement of the European Investment Bank and the European Bank for Reconstruction and Development. In the background stands the EU Growth Plan for the Western Balkans, with an envelope of six billion euros for the years 2024–2027, including two billion euros in grants and four billion euros in concessional loans, disbursed conditionally as reforms are implemented.
In the transport sector, the most visible investments concern the modernisation of railway lines, road sections and border crossings, often linked to the extension of the TEN-T network and the EU’s Global Gateway strategy. A recent example is Montenegro, where a major financing package has been secured for the modernisation of the strategic Bar–Golubovci railway section, part of Rail Route 4 of the TEN-T network. The project, worth around 175 million euros, combines a loan from the European Investment Bank with a substantial EU grant. Its aim is to increase speed, reliability, safety and capacity, thereby encouraging a shift from road to rail transport. Another flagship initiative is the long-discussed Corridor VIII, which is gaining renewed momentum as a project of both logistical and geopolitical importance. At the end of 2025, North Macedonia and Bulgaria signed an agreement on the construction and operation of a joint cross-border railway tunnel between Gyueshevo and Deve Bair, intended to close the missing link between Skopje and Sofia. At the same time, further stages of railway modernisation in North Macedonia, including electrification and signalling systems, are being financed with support from the EBRD, the EIB and EU grants channelled through the Western Balkans Investment Framework. In Bosnia and Herzegovina, major attention continues to focus on the construction of sections of the Corridor Vc motorway, a key north–south route linking Central Europe with the Adriatic Sea, financed through a mix of EU grants, international loans and national contributions.
Energy infrastructure represents the second major pillar of planned investments. Priorities include the modernisation of electricity networks, improvements in system resilience, energy efficiency in public buildings and, controversially, the expansion of gas infrastructure as a transitional solution. Several gas interconnectors feature prominently in regional planning documents, including connections between Serbia and Bulgaria, North Macedonia and Greece, Albania’s internal gas network and proposals linked to the Ionian Adriatic Pipeline, as well as links between Bosnia and Herzegovina and Croatia. At the same time, these projects have sparked debate, as critics warn that an excessive focus on gas risks locking the region into fossil fuel dependence and diverting resources from renewable energy and low-carbon solutions. Alongside these debates, energy efficiency programmes are quietly delivering tangible results, particularly through the renovation of schools, hospitals and other public buildings, often implemented in successive waves with support from EU and EBRD financing.
Beyond physical infrastructure, digitalisation is emerging as a growing investment priority. This includes the expansion of broadband internet, especially in rural areas, and programmes aimed at boosting the productivity and competitiveness of small and medium-sized enterprises through digital transformation. In 2025, the EBRD and the EU announced a programme worth approximately 377 million euros to support the digital and green transition of SMEs across the Western Balkans, combining loans delivered via local financial institutions with EU grants and technical assistance. Such initiatives are seen as essential for narrowing the development gap with the EU in public services, education and labour markets.
Financing these investments typically involves a complex mix of instruments. EU grants are used to reduce costs and risks, international financial institutions provide long-term loans and technical standards, and the Western Balkans Investment Framework plays a coordinating role by supporting project preparation, technical assistance and investment grants within a single pipeline. This financial architecture is embedded in a broader political framework, in which the European Commission links parts of the funding directly to reform progress and seeks to mobilise additional private investment. By 2025, agreements and pipelines involving the private sector were already expected to generate several billion euros in additional investment.
Despite this momentum, several factors could slow progress in the period from 2026 to 2030. These include limited administrative capacity at national and local levels, political disputes and cross-border tensions affecting international corridors, rising costs and climate-related risks such as floods and landslides, and ongoing disagreements over the appropriate energy mix between gas, renewables and energy storage.
If the current investment cycle is successfully completed, the region stands to gain a triple dividend in the form of shorter transport times, greater energy security and resilience, and faster diffusion of digital technologies. Politically, infrastructure development also acts as a powerful accelerator of integration, as transport links, energy networks and digital connectivity are among the most tangible ways of anchoring the Balkans more firmly within the European Union’s economic and regulatory space.
