MANILA, PHILIPPINES - The Asian Development Bank (ADB) has approved a financing facility of up to $170 million for road improvements along a transport corridor in western Mongolia that will help reduce the region's isolation and spur development in one of the country's poorest areas.
"The remote western region of Mongolia suffers from high levels of poverty and underdevelopment, partly as a result of the lack of paved roads," said Steven Lewis-Workman, Transport Economist in ADB's East Asia Department. "Building paved roads in an area where there are very few will bring broad social and economic benefits, including increased access to jobs and markets both within Mongolia and with neighboring countries."
The funds for the Western Regional Road Corridor Investment Program will be released through a multitranche financing facility, with an agreed first loan payment of $45 million. The program will construct over 290 kilometers of regional roads, rehabilitate and construct some connecting local roads, build and equip three road maintenance units, and provide training and other capacity development support for road sector institutions.
The investments, which complement another ongoing ADB road project in the corridor, will help complete the Western Regional Road. The route, which links Mongolia to the Russian Federation in the north and People's Republic of China in the south, is one of the Central Asia Regional Economic Cooperation (CAREC) program's priority corridors, designed to boost trade, tourism and investment amongst member countries and beyond.
Past ADB road investments in Mongolia have relied on foreign contractors to carry out the work, but the new program will target increased input from domestic contractors and help build the capacity of Mongolia's road sector institutions to construct, manage, and maintain Mongolia's rapidly expanding road network.
The first tranche loan, with a 32-year tenor, will come from ADB's concessional Asian Development Fund, with two further tranches to follow. The Government of Mongolia will contribute $92 million for a total investment cost of $262 million. The program will run for eight years with an expected completion date of December 2020.