The Asian Development Bank (ADB) has announced a loan of $300 million to help Georgia fund its urban infrastructure programme, estimated at a total cost of $1.1 billion. The loan is aimed at helping the Eurasian country to ease chronic traffic congestion, improve the environment and boost growth and jobs in its cities, according to a press release issued by ADB.
The report says the bank has approved a multi-tranche financing facility which will help fund part of the government’s $1.1 billion investment programme between now and 2020. The money will be used to improve infrastructure in the capital Tbilisi and other urban centres. These cities are facing the problem of rising traffic jams and road accidents, pollution, poor infrastructure and inefficient public transport systems.
The Municipal Development Fund of Georgia, which is currently overseeing all donor assistance in the urban sector, is the executing agency for the programme, which is expected to be completed by 2018.
The funds will be released in three tranches, with the first package of $85 million earmarked for the extension of Tbilisi’s metro system along with highway, pedestrian and bicycle infrastructure in various cities. The project also entails reorganising and building the capacity of municipal transport agencies and urban transport operators.
The ADB also said in the press release that since the overall financing requirement of the project is very large, it is considering working with other donor agencies such as the World Bank, European Investment Bank and European Bank for Reconstruction & Development to set up joint and parallel funding agreements.
The investment of $300 million will be financed from a blend of concessional and commercial resources. The first tranche loan will come from the concessional Asian Development Fund. It has a 32-year term, including a grace period of 8 years, with an annual interest rate of 1.0 percent during the grace period and 1.5 percent for the balance of the term. The second tranche will total $100 million, and the third tranche, $115 million, mainly from ADB ordinary capital resources.