Bosnia and Herzegovina - Republika Srpska Railways Restructuring Project

Overview & Synopsis

Ratings for the Republika Srpska Railways Restructuring Project for Bosnia and Herzegovina were as follows: outcomes were moderately satisfactory, the Bank's performance was satisfactory, and the quality of monitoring and evaluation was modest. Some lessons learned included: designing a disbursement pace that sustains implementation momentum and maintains client engagement is critical for complex reform projects. The project had an upfront disbursement of nearly 70 percent in the first year, followed by a prolonged slowdown. While early implementation was smooth and enabled progress on key milestones, momentum was later disrupted by the COVID-19 pandemic and changes in the RS Government. In hindsight, the team noted that a more balanced disbursement approach could have helped maintain client commitment and accelerated implementation. Improving operational efficiency and ensuring the long-term sustainability of railways requires a comprehensive approach that goes beyond workforce restructuring. Experience shows that labor reductions have a limited impact on reducing operating costs, particularly when outdated infrastructure and equipment remain in place. Without parallel investments in critical assets, such as modern signaling systems, renewed rolling stock, and improved last-mile connections to industrial sites, inefficiencies persist, and financial gains are constrained. Labor optimization must therefore be paired with sustained capital investment to reduce manual interventions and drive down operating expenses. The World Bank’s 2025 policy note provides timely support to RS authorities for developing a long-term railway strategy and identifies targeted infrastructure upgrades as key to attracting new traffic and ensuring financial sustainability. While the present project focused on institutional reforms and workforce restructuring, a Multiphase Programmatic Approach (MPA) could offer a more comprehensive approach by linking reforms with follow-up investments. Recent natural disasters further underscore the need for climate-resilient infrastructure and sustained investment in the sector.