WB grants USD 16 mln loan to Moldova for road rehabilitation

Moldova’s Government will benefit from a loan worth USD 16 mln under the International Development Association (IDA) credit terms. The funds are meant for road rehabilitation. The Letter of Agreement between the Government and IDA for the Road Sector Program Support Project, approved by the World Bank (WB) on March 29, was signed on Thursday, May 3, by the Minister of Finances Mihai Pop and WB Country Manager for Moldova, Edward Brown. IDA provides interest-free loans. The repayment period is of 40 years, followed by a 10-year grace period. According to Edward Brown, the provision of this loan is the first operation of this kind since the World Bank started its activities in Moldova and is a key issue on the agenda of the country’s development. Minister of Finances Mihai Pop said at the signing ceremony that the rehabilitation of roads is a stringent need for Moldova, as this sector did not enjoy sufficient investments in the past few years. As Pop says, the roads are deteriorated and have become an impediment in attracting investments in the other sector of the national economy. The minister said that the loan provision was conditioned by the obligation to annually augment the Road Fund. For his part, Minister of Transport and Road Management Vasile Ursu stated that this loan is a start in developing roads in Moldova, which are deteriorated in an 80% proportion. The funds will be used for renovating the Sarateni–Balti roadway, covering about 60 km. The roadworks are planned for the next spring. 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. Minister of Finances Mihai Pop and WB Country Manager for Moldova Edward Brown have also signed an agreement for a grant worth 1.47 mil Pounds Sterling from the UK Department for International Development. Disbursement of grant resources will be used by the government as general budget support financing of reform program activities, of which public investment spending is one of the top priorities.