World Bank Supports Further Improvement of Rural Road Network in Armenia

The World Bank’s Board of Executive Directors today approved a credit of US$ 36.6 million equivalent of additional financing for the Lifeline Road Improvement Project (LRIP-AF) for Armenia. This project will assist the Government of Armenia in its on-going efforts to drastically improve accessibility of the country’s main road network for the rural population and to create employment.  It will also help Armenia mitigate the impacts of the global economic crisis on the country’s economy and the well-being of its population.

The additional financing will further scale-up activities under the on-going original project to improve the condition of 140 km of roads. Over the years, insufficient investment in the rehabilitation and maintenance of lifeline roads has made the overall road quality poor, and left some roads difficult to use and others completely impassable. The poor conditions and inadequacy of the lifeline roads connecting rural communities to the main highways affects many aspects of rural life and means that business opportunities are lost, it’s harder for kids to get to school, and more difficult for people to get urgent medical attention when they need it.

For example, the inability to bring crops to market in time has resulted in losses of 40 percent or more, and in some communities up to 80 percent. The rehabilitation of the road network will therefore help farmers and small businesses in rural areas bring their products to market more easily and at a lower cost, reducing the external shock of the crisis.

“Rehabilitation of additional lifeline roads would also create temporary jobs in rural areas which have been hard hit by the crisis, and improve access to basic social services,” said Asad Alam, World Bank Regional Director for South Caucasus Countries. “While this immediate impact is critical, the project will also improve market connectivity for rural areas and build upon ongoing efforts to strengthen the basis for growth and competitiveness.”

“The direct and indirect job creation impact of the project is estimated at about 10,000 person months of employment,” added Satoshi Ishihara, Head of the World Bank team designing the project. “The implementation of the civil works will commence in late September and be completed by the end of the next construction season. This will provide an economic stimulus to rural communities, and ensure benefits from improved roads.”

The LRIP-AF has two main components. First, it will support rehabilitation of approximately 140 km of the lifeline roads, located in seven regions. In addition, a technical assistance component will help the Armenian Government to modernize and increase the efficiency of how they design their roads, and to support a road safety audit manual as well as a “safe village” pilot that could be scaled up to improve safety standards in other areas.

This project is part of the overall World Bank Group Country Partnership Strategy (CPS) for 2009-2012 which was approved in early June. The IBRD Flexible Loan has 25 years of maturity with 10 years grace period. Since joining the World Bank in 1992 and IDA in 1993, commitments to Armenia total approximately US$1, 313, 6 million.