World Bank approves additional financing for Azerbaijan's Highway Program

By Richard High26 June 2009

The World Bank has approved a US$ 62 million equivalent International Development Association (IDA) Credit and a US$ 113 million International Bank for Reconstruction and Development (IBRD) loan to the Republic of Azerbaijan as additional financing for the Second Highway Project.

The funding will be used to rehabilitate the Hajigabul - Bahramtepe road connecting an important agricultural region in the South West of Azerbaijan with the main urban centres.

In addition to rehabilitating 116 km of highway, the project will support the improvement of about 200 km of local roads connecting the highway with nearby villages.

In a statement Asad Alam, World Bank regional director for the South Caucasus, said the Hajigabul - Bahramtepe road project has "a very strong regional development dimension, as it integrates both highway rehabilitation, and village roads improvement. There is strong evidence from other projects in Azerbaijan, and elsewhere, that rehabilitation of roads significantly improves the mobility of goods and services between rural areas and urban centres, boosting businesses through a reduction in transport costs, increasing incomes, and reducing prices for the rural and urban poor.

"This Project will strengthen domestic connectivity. More than half a million Azerbaijanis will directly benefit from road improvements by being better able to trade with main urban centres and neighbouring regions," added Mr. Alam.

The additional financing has two components which include the civil works for the roads, consultancy services for the engineering design of connecting roads and the supervision of the works as well as the provision of technical assistance for project implementation and the design of future investments.

The IDA is the part of the World Bank that helps the world's poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people's living conditions.

IDA complements the World Bank's other lending arm, the IBRD, which serves middle-income countries with capital investment and advisory services.

IDA lends money (known as credits) on concessional terms. This means that IDA credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period.

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