ADB’s $40 million, 32-year concessional loan is being extended to Georgia’s Municipal Development Fund (MDF), which will in turn provide funds to local governments to rebuild infrastructure, and improve the quality, coverage and continuity of critical urban services.
Funds will be provided to financially weaker municipalities as grants.
Georgia’s municipal services have fallen into disrepair since the collapse of the former Soviet Union. Most urban water supply systems are more than four decades old, only five of 29 wastewater treatment plants are still operating, and poorly managed solid waste disposal sites damage the environment.
The country’s network of urban roads is also in urgent need of rehabilitation.
“Many municipalities in Georgia don’t have the resources they need to give their people clean drinking water, good roads, and other basic services,” said Juan Miranda, Director General of ADB’s Central and West Asia Department. “This negatively affects families’ quality of life, hampers development, and constrains investment and job creation.”
“The recent conflict in Georgia adds a new level of urgency to the need for immediate rehabilitation and reconstruction assistance,” he added.
The project will help improve public health and living standards, increase poor families’ access to services and generate new jobs.
The project will also help strengthen municipal governments’ ability to improve service delivery and attract private investment. At present, most state-owned water supply companies are not financially viable because of low tariffs and poor payment collection rates, hampering the government’s privatization plans.
ADB staff are currently on the ground in Georgia as part of a joint needs assessment team, working together with other international lenders and development agencies, to assess both direct, immediate damage of the conflict and its medium-term impact on infrastructure and service provision.