The Local Road Connectivity Project is supported by a EUR 107 million IBRD loan to finance infrastructure investments in municipal roads and streets including related consultative and preparatory processes (EUR 70 million) and Contingent Emergency Response Component (CERC) (EUR 37 million). The biggest part of the loan proceeds (EUR 65.3 million) is mainly related to road rehabilitation and improvement (EUR 62.8 million) that supports priority investments identified by the municipalities for rehabilitation/reconstruction of municipal roads and streets of about 450 km, to improve their quality, safety, and resilience, as well as community-driven infrastructure pilot (EUR 2.5 million) investments that may include measures to improve: a) safety such as sidewalks, bike paths, supplementary street lighting, bus shelters, junction improvement, road calming, and pedestrian crossings; b) climate resilience such as slope stabilization and spot drainage works; and c) public transportation and school bus services; and d) some funding may be dedicated to vulnerable groups including Roma. Eligible for financing are local roads/streets in rural and urban municipalities, particularly enabling access of the citizens to the places of essential public interest and use (health and education, sport, food and labor markets, religious institutions and places, public institutions, government administration, commercial facilities including agricultural markets and processing facilities, tourism sites, and industrial parks).

The project will finance municipal capacity assessment and capacity building to help the Ministry of Transport and Communications (MoTC) to assume a stronger role in overseeing the development and quality of local roads (EUR 2.7 million). The municipal capacity assessment aims to assess the strengths and weaknesses of the current system and propose a program for enhancing capacity, where appropriate. Capacity building will be geared toward the existing capacity and human resources in municipalities and will focus on: (a) collecting road inventory data; (b) using the simple RAMS to monitor road conditions and program road maintenance and rehabilitation; (c) redressing citizen grievances; (d) promoting transparency in decision making; and (e) executing road maintenance activities more efficiently through the improved contracting methods and inter-municipal cooperation where appropriate. Technical assistance and capacity building to MoTC will provide support for: (a) developing a central government policy for municipal roads; (b) defining a sustainable source of financing for both capital investment and maintenance; (c) reviewing and or updating the allocation formula used to transfer funding to municipalities through PESR; (d) developing a central government mechanism for monitoring municipal road conditions; (e) conducting road safety capacity review and providing recommendations for institutional change; (f) developing climate-resilient design guidelines for local and low-volume roads; and (g) coordination with other stakeholders, including ZELS and regional development agencies.