ADB road rehabilitation project to promote regional trade

A new Asian Development Bank (ADB) project on road rehabilitation in Kyrgyzstan aims to promote regional trade and reduce poverty in the country by boosting economic growth. The project, worth US $32.8 million, will improve the 124-km Osh-Gulcha-Sopu Korgon section of the Osh-Sary Tash-Irkeshtam road in the south and procure maintenance equipment for the entire road. "It will reduce poverty and boost economic growth in the country and foster regional cooperation by rehabilitating a major link between Kyrgyzstan, the People's Republic of China [PRC] and Uzbekistan," Graham Dwyer, an ADB spokesman, told IRIN from Manila, on Wednesday. The road comprises part of a transport corridor linking the three countries and connects to the Bishkek-Osh road, a vital national transport corridor, and to the road to Tajikistan and on to Afghanistan, both of which are also being rehabilitated with ADB support. "Trade between China and Kyrgyzstan has been growing rapidly and the potential for this to continue with more rapid increases is substantial. There is a broader regional significance in that the road also provides connections to Afghanistan and Tajikistan to the south and Almaty, other cities in Kazakhstan, and the Russian Federation to the north," Dwyer said. The rehabilitation of the road should facilitate the formation of a comprehensive transport network extending from Europe to the coastal regions of China, ADB experts say. "Landlocked Kyrgyzstan is one of the poorest countries of the former Soviet Union and its future development is dependent on enhancing its access to regional markets and expanding trade," said Jeffrey Miller, an ADB senior project economist. The main causes of poverty in the project area, where the primary economic activity is agriculture, are unemployment and low prices for agricultural produce, Dwyer maintained. "The project will address these by promoting trade and transport of produce, creating jobs in the actual building of the road, providing better access to social services like health and schools and generally stimulating growth and economic activity," Dwyer said. According to the ADB, the project plans to reduce poverty in an area where it affects almost half of the population, putting it higher than the national average of 41 percent. It is therefore expected to benefit about 67,000 people, including 38,000 poor. An $800,000 technical assistance grant accompanies the loan to improve road maintenance and help the Kyrgyz Ministry of Transport and Communications (MOTC) establish and make operational a transport corridor management department for the Osh-Sary Tash-Irkeshtam road. ADB is the major provider of assistance to the country's road sector, with about $145 million worth of loans approved for road rehabilitation and $4.3 million in technical assistance grants. The loan, which covers 75.6 percent of the project's total cost of $43.4 million, comes from ADB's concessional Asian Development Fund. It carries a 32-year term, including a grace period of eight years, with an annual interest at 1.0 percent during the grace period and 1.5 percent a year thereafter. The Organisation of Petroleum Exporting Countries (OPEC) Fund is expected to provide cofinancing worth $4 million, to be considered this December, and the Kyrgyz government will contribute $6.6 million towards the project, which is due for completion by September 2008.