Rural Investement and Services Project Supplemental

closed

The Rural Investment and Services Project was developed because the absence of basic support services for newly emerged private farms, was hampering the way to agricultural recovery, and long-term growth. Speedy recovery is a prerequisite for Moldova's agricultural sector to play its full role in providing the underpinnings forfuture income growth, and poverty reduction. The Project promotes sustainable growth and rural employment through private sector development of small and medium-scale commercial farms, and agricultural enterprises, and supporting institutional development, particularly the development of savings, and credit associations in rural areas. The Borrower is unable to finance the additional costs with own resources, and no other donor has been able to fill the funding gap. The purpose of this Supplemental Credit is to "restore" the original IDA allocation to meet funding needs, rather than addressing a cost overrun due to exceptional circumstances, a criterion traditionally required for supplemental financing. In applying such justification, this operation strictly follows precedents of supplemental financing granted by the Association to projects facing similar unexpected, constringing situations. The proposed Supplemental Credit would be used to return the investment program for the Rural Investment and Services Project to its original size. Aside from the increase of financing, no other changes to the originally negotiated Project Credit are proposed. The Project is expected to be completed by the original Closing Date of December 3 1,2005.