World Bank Supports Delivery of Inclusive Municipal Services Nationwide in FYR Macedonia

January 11, 2016

Washington, January 11, 2016 - The World Bank Board of Executive Directors today approved a EUR 25 million IBRD loan for the Second Municipal Services Improvement Project (MSIP2) in FYR Macedonia. The project aims to improve transparency, financial sustainability, and inclusive delivery of municipal services across the country.

MSIP2 will provide sub-loans to municipalities for infrastructure investments such as water supply, sewerage, solid waste management, local roads, energy efficiency improvements to municipal buildings, and other high priority municipal infrastructure investments with clear impact on welfare of citizens and efficiency of services. The project will also introduce a grant component to enhance service delivery and infrastructure for poorer and marginalized communities within municipalities throughout FYR Macedonia.

Fifty-seven of the country’s eighty municipalities have chosen to participate in the first Municipal Services Improvement Project and are implementing or have already completed priority infrastructure projects.  36 percent of these projects have been for street rehabilitation, 13 percent for water supply, 13 percent for rehabilitation of municipal buildings, 13 percent for energy efficiency improvements, 12 percent for solid waste management, and 13 percent for procurement of communal service vehicles or other priorities.

The Second Municipal Services Improvement Project will continue to link investments in priority infrastructure with greater government transparency and accountability and strong citizen engagement at the local level” said Ellen Goldstein, World Bank Country Director for South East Europe. “Going forward, we want to encourage all municipalities in FYR Macedonia to participate in the project, and to address poverty and exclusion by investing more in their poorer communities.”

The Second Municipal Services Improvement Project consists of three components.

The Municipal Investment Sub-loans Component (EUR 18.5 million) will provide financing to municipalities for investments in high priority local infrastructure.

The Poverty and Social Inclusion Investment Grants Component (EUR 4.9 million) will provide investment grants to municipalities as an incentive for them to invest in infrastructure improvements in poorer and marginalized communities within their jurisdictions.

The Project Management, Monitoring and Evaluation, and Capacity Building Component (EUR 1.5 million) will support project implementation and monitoring, as well as help ministries and agencies at the national and municipal levels to strengthen institutional and financial systems for sustainable service delivery.

“MSIP2 aims to promote transparency of municipal operations by linking disclosure of budget and other information with access to financing, while building capacity of municipalities to plan and implement infrastructure investments,” said Toshiaki Keicho, World Bank Senior Urban Development Specialist and Task Team Leader of the Project“The project will also facilitate citizens’ engagement in investment choice and design so that municipalities could respond better to demands of local communities and beneficiaries of municipal services.”

The first MSIP loan of EUR 18.9 million was followed by two additional financings. The first additional financing of EUR 37.2 million was provided by the World Bank in 2012. The second additional financing of EUR 15.5 million was recently approved by the European Union with financing from the Instrument for Pre-Accession specifically to support a Rural Investment Window.

MSIP2 is financed from a World Bank loan of EUR 25 million with a final maturity of 18 years including a grace period of 5 years. Total maturity of municipal sub-loans will not exceed thirteen years, including up to three years of grace period. All municipalities are eligible and encouraged to participate.

In view of the electoral cycle in FYR Macedonia, the MSIP2 project will become effective and disbursements will begin only after upcoming parliamentary elections are completed.

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