Responding to an acute funding and supply crisis in urban public transport services during the past decade, the World Bank made eight loans benefiting about 20 cities in ex-socialist countries in Europe and Central Asia (ECA). The main strategy for the first five projects, now completed, was to make loans for fleet replacement and rehabilitation, conditional on restructuring publicly owned operators, increasing their fare revenue, instilling a greater discipline in subsidy payments, and attempting to bring private capital and skills into the sector. Services provided by publicly owned operators were improved and cost recovery from fares increased, but the funding gap still persists. In the last three projects, approved in the late 1990s, the focus shifted to attracting private operators under a competitive framework, creating markets in road maintenance, and accelerating traffic management. A strategic shift is now warranted, recognizing that increasing motorization and the consequent shifts in the modal split are of primary importance in ECA urban areas. A proposal is presented to extend market principles to the automobile as well, primarily through city-based road use charges. The new strategy continues to emphasize the creation of competitive markets, increased user charges, and sound funding for public transport services, subject to protection mechanisms for low-income and other vulnerable groups. Other building blocks of the strategy (e.g., investment agenda, capacity building, and knowledge-oriented activities) are derived directly from the preferred policy orientations.
Abstract