World Bank Approves Additional Financing for the Regional and Municipal Infrastructure Development Project in Georgia

November 2, 2010

WASHINGTON, November 2, 2010 – The World Bank Board of Executive Directors today approved an Additional Financing (AF) in the amount of US$ 45 million to Georgia for the Regional and Municipal Infrastructure Development Project (RMIDP). The Additional Financing has been requested by the Government of Georgia to scale up the Project activities through rehabilitating additional municipal services and infrastructure throughout the country, and preparing strategic development plans for a number of selected cities.

The goal of the original RMIDP (US$ 40.00 million equivalent, International Development Association (IDA) Credit) was to mitigate the impact of the August 2008 conflict. The Project was approved by the World Bank Board of Directors on October 2, 2008. The RIMDP Additional Financing includes a US$ 33.5 million loan from the International Bank for Reconstruction and Development (IBRD) and an IDA credit of US$ 11.5 million.

This project will bring real benefits to tens of thousands of Georgian families across the country through improved local roads, clean water services and better sanitation, which are especially important for women and girls. With the new co-financing from the EU, the original RMIDP project will further expand infrastructure restoration and improvement of housing conditions for conflict affected people in Georgia. It will also help to enhance the institutional capacity and performance of municipalities,” said Asad Alam, World Bank Regional Director for the South Caucasus.

The Project will support infrastructure investments by providing loans through the Municipal Development Fund (MDF) to creditworthy municipalities, and grants to municipalities which are not yet ready for borrowing. Technical support will be provided to participating municipalities to ensure sustainable services.

The Municipal Development Fund has grown up to become a solid non-bank financial intermediary that plays a very substantial role in funding municipal infrastructure development in the country,” said Ahmed Eiweida, Sustainable Development Country Sector Coordinator for the South Caucasus. “The MDF’s good performance is well appreciated and reflected by the growing interest both from the Government and the donors in using the MDF as a primary organization for channeling grants and credits to the local self-governments.”

The Project involves significant collaboration with donor partners. The World Bank has a service agreement with the Millennium Challenge Corporation (MCC) to supervise its municipal infrastructure projects implemented by the MDF, and a recent co-financing Trust Fund agreement with the EU to fund activities related to Internally Displaced Persons (IDPs) in Georgia. The Bank is also collaborating with the ADB, EBRD, USAID, German Cooperation (GTZ and KfW), UNHCR and the Cities Alliance Program, all of which provide technical assistance or finance municipal infrastructure projects.

Current World Bank portfolio in Georgia consists of 12 active investment projects for a total of US$ 469 million. In addition, the second in a series of the Development Policy Operations (DPO2) was approved by the World Bank Board of Directors on July 2010 with a total financing of US$ 50 million.

Provided as the Additional Financing for the Regional and Municipal Infrastructure Development Project, the IDA Credit carries a maturity of 20 years including a grace period of 10 years, and the IBRD Loan carries a maturity of 27 years including an 8 year grace period.

Media Contacts
In Washington
Elena Karaban
Tel : (202) 473-9277
In Tbilisi
Inga Paichadze
Tel : (99532) 913-096