Government to negotiate with WB the conclusion of Moldova’s Road Sector Support Agreement

The Government will negotiate with the World Bank (WB) the conclusion of the Agreement to finance the Road Sector Program Support Project, providing a USD 16 mln loan for Moldova. This decision was made at the Government meeting held this week. The WB approved on March 29 a USD 16 million Road Sector Program Support Project for Moldova under the International Development Association (IDA) credit terms. IDA is the World Bank’s concessional lending arm. It is focused on the poorest countries, with a per person income of less than USD 885 annually. IDA credits are interest-free, repayable in 40 years, and include a grace period of 10 years. The support project is focused on rehabilitation of about 400 lane-km of main roads. It consists of physical road works, consulting and other services that are directly related to the works, including feasibility studies (technical and economic), detailed engineering design, preparation of bidding documents and supervision of works. This component will absorb about 90 percent of total project resources. The second component is aimed at improving the capacity of the State Road Administration to manage effectively the road network. Moldova’s road network totals about 16,800 km, of which over 3,600 km are classified as national roads and the remainder as local roads. However, about 67 percent of national roads and more than 75 percent of local roads are in poor condition. This is the direct result of insufficient maintenance and rehabilitation of the road network during the past 15 years when very little resources were spent on roads. The total cost of the Road Sector Program Support Project is close to USD 50 million. In addition to World Bank financing of USD 16.0 million, the project will be co-financed by the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). EBRD and EIB will each contribute EUR 12.5 million. The project will be executed over a four-year period, from mid-2007 to mid-2011.