(LUXEMBOURG) - Bosnia-Hercegovina, the last Balkans nation without formal links to the European Union, signed a key pact on Monday on closer ties with the bloc, the first step toward possible future membership.

The Stabilisation and Association Agreement, which will give Bosnia access to funds to help build its dilapidated infrastructure, was signed at a meeting of EU foreign ministers in Luxembourg.

"This is a milestone that marks a new stage in our relations and is also the gateway to eventual candidacy to the European Union," said EU Enlargement Commissioner Olli Rehn.

Bosnia had been expected to sign the trade-and-aid agreement in April, after its lawmakers finally adopted long-disputed police reforms.

But the date had to be pushed back due to technical issues arising from the translation of the document into EU and Bosnian languages.

"The SAA will bring concrete benefits to the citizens of Bosnia-Hercegovina and will promote such reforms that will generate economic growth and help create jobs and better living standards," said Rehn.

But he warned that "much work lies ahead to implement the SAA."

"Laws must be passed and institutions strengthened," he said. "There is no time to waste. It is important to keep up the momentum and build a genuine consensus on EU related reforms."

Haris Silajdzic, Muslim chair of the tripartite presidency, one of several Bosnian officials to attend, vowed: "I am sure that Bosnia-Hercegovina will be a constructive member of the European Union whenever that time comes."

Bosnia becomes the last Balkans nation to step onto the ladder which leads to EU membership.

Croatia began membership talks in 2005 and is expected to eventually become the EU's 28th member.

Macedonia is officially an EU candidate nation while Albania, Montenegro and Serbia have already signed their own SAAs.

The EU has made the integration of Balkan nations one of its main priorities in a bid to stabilise a region torn apart by wars in the 1990s.

Since its 1992-1995 war, Bosnia has consisted of two autonomous entities: the Serb Republika Srpska and the Muslim-Croat Federation.

The two are linked by weak central institutions while each has its own parliament, government and police.

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