Central and Eastern Europe

2021 RankingCountry
15Czech Republic
18Slovakia
21Poland
24Hungary
27Bulgaria
28Romania
37Russia
46Ukraine

Connectivity across borders and energy transformation are top priorities for nations in Central and Eastern Europe.

Infrastructure across Central and Eastern Europe (CEE) has improved markedly in recent years. The 2021 Infrastructure Index shows many countries in the region achieving significant improvements on their 2019 scores. Strong prospects for growth, coupled with sizeable infrastructure financing needs, will continue to make CEE an attractive destination for investors.

Infrastructure programmes

CEE countries that are EU members benefit from several infrastructure development programmes, including the Next Generation EU instrument, established in response to the coronavirus pandemic, which will fund public investment under national recovery and resilience plans.

Another new source of finance is the Three Seas Initiative Investment Fund, backed by various CEE national development finance institutions. This made its first investments in 2020, buying a controlling interest in Greenergy Data Centers, a CEE data centre platform, and Cargounit, a key player in the CEE railway industry. The fund is intended to complement and strengthen the capital deployment of individual Three Seas countries and EU financial instruments.

Some CEE nations have also signed up to China’s Belt and Road Initiative (BRI), although the amount of Chinese investment that has occurred various significantly between countries, with many regional BRI projects being in smaller non-EU states.

Bolstering connectivity

There is significant focus on connectivity – both physical and technological – across CEE. Regional policy objectives include strengthening EU integration by enhancing the security of infrastructure supply and contributing to enhanced interconnectivity between EU member states. The rail sector in particular has initiated prominent cross-border projects, such as the modernisation of the Budapest-Belgrade line, and the construction of a line between Katowice in Poland and Ostrava in the Czech Republic. Work also continues on the Rail Baltica network, aimed at integrating the Baltic States into the EU’s rail network.

In contrast, despite the region’s good 4G coverage and relatively competitive fibre broadband availability, 5G penetration looks likely to be slow, with many programmes having been disrupted by the pandemic. While the CEE digital economy has been growing strongly, without additional investment in infrastructure its technological competitiveness may be at risk – although key digital leaders, such as Estonia, are likely to retain their strong positions.

Energy transformation gathers pace

CEE countries are making great strides in the energy sector. Market participants expect to see a wave of EU backing for energy transformation projects. Decentralised energy systems are driving investment in networks, and climate change targets are spurring progress in areas such as renewable energy, waste-to-energy infrastructure and, in some countries, nuclear new build.

Publication
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Authors

Marcin Bejm
Marcin Bejm
Partner
Head of Energy and Projects Department; Head of Infrastructure & Project Finance
Warsaw
Kostadin Sirleshtov
Kostadin Sirleshtov
Managing Partner
CEE Head of Energy & Climate Change
Sofia

"The gap created by the reduction in funding from the EU will provide room for private sector investors.”