“We signed a treaty with the World Bank and received a concessionary loan which means we will pay a very low interest for the first 15 years. This loan will facilitate the construction of an additional 200 km of roads.”
On 23 July 2014, during the plenary session of the Parliament, the Minister of Finance of Georgia, Nodar Khaduri, presented the budget implementation reports of 2013 and the first half of 2014. The Minister also answered the questions of the MPs. About the infrastructure projects, Mr Khaduri stated: “We signed a treaty with the World Bank and received a concessionary loan which means we will pay a very low interest for the first 15 years. This loan will facilitate the construction of an additional 200 km of roads.”
FactChecktook interest in this statement and verified its accuracy.
According to the information published on the website of the Ministry of Finance, on 9 July 2014, Nodar Khaduri and the World Bank Regional Director for the South Caucasus, Henry Kerali, signed a treaty on the Third Secondary and Local Roads Project. In terms of the treaty Georgia will receive a USD 75 million concessionary loan. The length of the loan is 25 years, ten of which will be concessionary and the interest rates will vary depending upon the LIBOR (the LIBOR is a London Interbank interest rate which is used for the regulation of international loans).
The project includes the rehabilitation of 200 km of secondary and local roads and capacity-building and strengthening in the local and secondary roads management abilities of the Roads Department of Georgia.
On 30 July 2014, several projects, submitted for ratification, were discussed at the plenary session of the Parliament. The project on the loan agreement between Georgia and the International Bank for Reconstruction and Development (Third Secondary and Local Roads Project) was among them.
FactCheck found detailed informationabout the project on the World Bank official website.
According to the information, the board of the executive directors of the World Bank approved the USD 75 million loan for the Third Secondary and Local Roads Project implementation, allocated by the International Bank for Reconstruction and Development (IBRD) to Georgia. The aforementioned project is based upon the two current projects of secondary and local roads and other projects funded by the World Bank in the field of road construction. The objectives are to reduce transport costs on project roads and improve the sustainability of road asset management in the secondary and local project road network. The project consists of three components; namely, the first comprises the rehabilitation and improvement of secondary and local roads, the second is capacity-building and strengthening in local and secondary roads management and the third deals with road safety technical assistance.
In total, 200 km of regional and local roads will be rehabilitated within the terms of the project. As a result, it will become easier to connect with three cities (Telavi, Samtredia and Tsalenjikha), 126 villages and approximately 45,600 families – almost 138,000 people. Most of these villages are situated in regions with bad roads and high poverty rates.
The project is to be finished by 30 September 2018. In order to clarify the details of the loan FactCheckcontacted the Ministry of Finance of Georgia. According to the provided information, the term of the loan for the Third Secondary and Local Roads Project of Georgia is 25 years, ten of which will be concessionary and the interest rates will depend on the LIBOR. The staring date of the repayment of the main sum of the loan is 15 December 2024 and the final date is 15 June 2039. Parts of the main sum are repaid in two equal portions, two times a year.
Conclusion According to the information obtained by FactCheck,
on 9 July 2014, the Minister of Finance of Georgia and the representative of the World Bank signed an agreement according to which Georgia will receive a USD 75 million loan for the rehabilitation of secondary and local roads. The length of the loan is 25 years, ten of which will be concessionary. The project includes the rehabilitation of 200 km of roads in different parts of the country.
Hence, we conclude that Mr Khaduri’s statement: “We signed a treaty with the World Bank and received a concessionary loan which means we will pay a very low interest for the first 15 years. This loan will facilitate the construction of an additional 200 km of roads,” is TRUE.
