WASHINGTON, July 15, 2010 – The World Bank Board of Executive Directors today approved a US$ 40 million loan for the second Additional Financing for the Lifeline Road Improvement Project (LRIP-AF2) for Armenia. This project will assist the Government of Armenia in its on-going efforts to improve accessibility of the country’s main road network for the rural population and to create employment. It will also help Armenia to further mitigate the impacts of the global economic crisis on the country’s economy and the well-being of its population.
The second additional financing will further scale-up activities under the on-going project to improve the condition of 190 km of roads. Over the years, insufficient investment in the rehabilitation and maintenance of lifeline roads has made the road quality poor, and left some roads difficult to use and others completely impassable. The poor conditions and inadequacy of the lifeline roads connecting rural communities to the main highways affect many aspects of rural life: it means that business opportunities are lost, children find it hard to get to school, and it is difficult for people to get urgent medical attention when they need it.
For example, the inability to bring crops to market in time has resulted in 40 percent or more of harvest loss; in some communities - up to 80 percent of loss. The rehabilitation of the roads network will therefore help farmers and small businesses in rural areas to bring their products to market more easily and at a lower cost.
“As in the case of the original project, rehabilitation of additional lifeline roads would create temporary jobs in rural areas, which have been hit by the crisis, and improve access to basic social services,” said Asad Alam, World Bank Regional Director for the South Caucasus Countries. “While this immediate impact is critical, the project will also improve market connectivity for rural areas and build upon the ongoing efforts to strengthen the basis for growth and competitiveness.”
“The direct and indirect job creation impact of the project is estimated at about 19,000 person-months of employment,” added Olivier Le Ber, Head of the World Bank team designing the project. “The implementation of the civil works will commence in late July. It is expected that up to 50 km will be rehabilitated by the end of this year, providing economic stimulus to rural communities.”
About 153 km of rural roads, including 35 km under the ongoing LRIP-AF1, were rehabilitated, allowing the Government to swiftly mitigate the negative impact of the financial crisis. The original project outperformed the target by rehabilitating additional 18 km of roads thanks to the significant cost savings generated from the reduction in the cost of construction and the adoption of more cost effective design standards during the implementation. About 12,000 person-months of jobs have been created so far. By hiring region-based contractors local construction industries remain on business. Basic accesses to social services have been improved by connecting the rural poor to the main road network. Travel time was reduced on average by about 40 percent.
The LRIP-AF has two main components. First, it will support rehabilitation of approximately 190 km of the lifeline roads, located in nine regions. In addition, a technical assistance component will help the Armenian Government to modernize and increase the efficiency of designing the roads. The LRIP-AF2 will also continue supporting the “safe village program” through small road safety civil works combined with awareness campaigns at the community level.
The IBRD Flexible loan has a maturity of 25 years and a grace period of 10 years included.
Since joining the World Bank in 1992 and IDA in 1993, the commitments to Armenia total approximately US$ 1, 358, 7 million.