Community Development Fund Supplemental Credit

closed

The development objective of the Community Development Project is to contribute to the improved use of, and satisfaction with, social and economic services in participating rural, and urban communities. Project amendments occurred following the political crisis in 2002, when project restructuring responded to the urgent social, and economic needs of the Government, adding a component to a provide permanent social safety net mechanism; another project expansion later included urban areas mostly affected by the crisis; and, a new amendment (April 2004) included a component allowing the finance of emergency activities following the damage caused by the Elita and Gafilo cyclones. This Supplemental Credit will cover the cost overrun associated with increased number of development targets, and hence, higher costs of inputs. The additional financing will assist in the post-cyclone reconstruction efforts, targeting communities in the affected areas, activities consistent with the original project objectives, and components. In light of these circumstances, and because: the cost overrun is due to exceptional circumstances beyond the Borrower's control; that the credit is being implemented in compliance with covenants; that it is impossible to reduce the scope of the project to fit the available resources, without significantly impairing the project's economic viability, or capacity to achieve its objectives; that the Government is unable to finance the additional costs, and obtain additional funds from other lenders on reasonable terms or reasonable time; and, that the time available is too short to process a further freestanding Bank loan, this supplemental credit is fully justified given the emergency situation in Madagascar, and the borrower's, and implementing agency's demonstrated commitment.