Lao PDR to Strengthen and Climate-Proof Rural Roads with World Bank Support

December 13, 2016

WASHINGTON, DECEMBER 13, 2016 – The World Bank’s Board of Executive Directors approved today a US $25 million credit from the International Development Association (IDA) to help Lao PDR strengthen its road maintenance systems and improve road connectivity throughout the country.

The approved Lao PDR Road Sector II Project is part of the country’s national program to build climate resilient infrastructure nationwide through a stronger institutional framework for road maintenance. This project will help strengthen the government’s capacities for sector financing, planning, integration of climate change adaptation into road sector strategies, business processes, standard designs for climate resilient road asset management, governance and accountability, monitoring and evaluation.

"We thank the World Bank for the assistance it has extended to help Lao PDR achieve the goals of the country's National Socio-Economic Development Plan (NSEDP),”said  Dr. Bounchan Sinthavong, Minister of Public Works and Transport. “Through this project, we are able to partner with the World Bank to support the country's road maintenance program, resulting in better and safer roads. Many people from rural areas will benefit from more reliable roads, in both dry and rainy seasons." 

In addition, the Road Sector II Project will support road maintenance works in six poor provinces that are highly vulnerable to flash floods, landslides, and other natural disasters --- Phongsaly, Houaphan, Oudomxay, Xiengkhouang, Xayabouly and Bolikhamxay.  Around 1.6 million people from these provinces will benefit from improved and more reliable roads, ensuring year-round access to basic services, to schools and markets, even during the rainy season. Lao PDR is one of the ASEAN countries most vulnerable to floods, droughts and storms with local transport infrastructure particularly exposed due to the climate-related increase in the frequency and intensity of natural disasters.

“Better roads can help Lao PDR avoid disaster-related road closures, improve peoples’ mobility and access to basic services, markets, and sources of livelihoods,” said Ulrich Zachau, World Bank Country Director for Southeast Asia.The World Bank is pleased to help finance this project and support the Government of Lao PDR’s goal to build stronger, safer roads to provide more services and more income opportunities for more people.” 

This project is co-funded with an additional grant of EUR 5 million, credit of EUR 6 million from the Nordic Development Fund and US $10 million from the Government of Lao PDR.  The terms for the IDA credit include a maturity of 25 years, with a grace period of five years and a service charge of 0.75 percent, and interest rate of 1.25 percent.

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