The European Bank for Reconstruction and Development (EBRD) has signed an agreement with Azerbaijan to extend $750m loan for the modernisation of transport projects in the country.

The EBRD will provide the loan in three equal tranches of $250m each for the reconstruction of key regional roads feeding into the main corridor highways.

The first tranche will be used for reconstruction of Mingachevir- Bahramtapa road involving repair of 156km road.

EBRD managing director Olivier Descamps for Turkey, Eastern Europe, Caucasus and Central Asia, said, "EBRD funding for the regional road improvements is essential to reaching out to the more remote areas of the country to help promote more diverse and more sustainable economic development."

The modernisation of the road will improve transport links for half a million people living in this rural area and provide access to the main international highway that runs between the Azerbaijani capital of Baku and the Georgian border.

The financing agreement with EBRD involves transport project in the country worth $900m.

Investment in road sector is expected to give a boost to regional trade links and supports the Azerbaijan government’s strategy to support economic diversification, especially targeting the non-oil sectors of the economy.

The rehabilitation of these regional roads links is part of Azerbaijan’s plan to ensure effective transport links from the country’s regions into the core corridors.

Previously, EBRD had provided a loan to Azerbaijan in 2004 that helped to rebuild the main road running from Hajigabul in the western part of the country to Kurdamir, located on the Silk Road – the historic trading route between Asia and Europe.

The loan from the bank will complement road rehabilitation projects being carried out in the country with funds from the World Bank and the Asian Development Bank.