An initial environment examination was undertaken. Rationale The improvement of road transport services is vital for economic development and poverty reduction in Tajikistan, which is the poorest of the Central Asian republics. The breakup of the former Soviet Union, civil conflict, and major natural disasters have resulted in a dramatic decline of economic activity and increase in poverty. Poverty incidence is currently estimated at 91 percent in the project area and 83 percent in Tajikistan overall. Rehabilitation of the country's road infrastructure is necessary to sustain the economic recovery now under way and to reduce poverty.
Roads are the most important mode of domestic freight and passenger transport.
Maintenance of a good road network is vital for the agriculture sector, which accounts for 65 percent of total employment in Tajikistan. Roads provide the sector with crucial access to markets for produce as well as sources of inputs, and the rural population with access to economic opportunities and social services. Since sections of the road were last rehabilitated in the 1970s and are deteriorating due to inadequate maintenance, rehabilitation is necessary to extend the road's useful life. The main objective of the Project is to enhance incomes and reduce poverty in Khatlon Region by improving road transport infrastructure and thereby supporting the creation of productive employment opportunities. Special Funds resources will be provided, with a term of 32 years including an 8-year grace period, and an interest charge of 1 percent per annum during the grace period and 1.5 percent thereafter.