Local Roads Connectivity Project - Additional Financing

active

The objective of the parent project was to improve government capacity to manage local roads and improve access to markets and services. These objectives are to be accomplished by the implementation of four components, including: (i) capacity enhancement to build local government capacity to manage local roads and strengthen institutional and policy arrangements at the central government level; (ii) rehabilitation of local roads and community facilities to provide safe and climate resilient access to markets and services, and pilot community-driven transport investments; (iii) Project Implementation Support, which finances operating costs of the implementation agency and technical audit; and (iv) a Contingent Emergency Response Component. The project will finance rehabilitation of municipal roads in all of the municipalities of North Macedonia, estimated at about 450 km, and to include a combination of rural roads and urban streets.On May 8, 2020, at the request of the Government of North Macedonia, the World Bank activated the Contingency Emergency Response Component (CERC) of the Local Roads Connectivity Project (LRCP) (P175841). It allowed a reallocation of US$42.58 million to address the compounding and negative impacts of the Coronavirus Disease 2019 (COVID-19) pandemic. The resources were used to provide financial support to private sector employers severely affected by the COVID-19 crisis, establishing an income support scheme for the months of April, May and June 2020. As of July 2020, 155,082 employees received a salary subsidy and 20,079 received a social contributions subsidy.The budget reallocated for the CERC comes from undisbursed and uncommitted resources originally earmarked for activities in Components 1, 2, and 3 of the LRCP as described above. This has created a financing gap in implementing key activities under these components, which are essential for achieving the Project Development Objectives (PDO).The proposed Additional Financing (AF), as requested by the Government of North Macedonia, in the amount of US$42.58 million will support a full replenishment of the financing gap in the LRCP. The proposed AF, together with a Level 2 project restructuring, would formalize the reallocation of resources, revise the PDO, allow for an update of the Results Framework (RF), and facilitate the full implementation of key activities under Components 1, 2, and 3. The implementation arrangements, original project components and the closing date of the Project would remain unchanged.