The Republic of Mariy El is one of 83 Regions in Russia with autonomous executive and legislative branches and budget. It is located in the European part of Russia, bordering Chuvash Republic in the South West. It is one of the smaller and less developed Regions in Russia with a population of about 700 thousand and an estimated Gross Regional Product (GRP) per capita of $2,155 (2006), which is significantly below the national median ($3,111; 2006).

The key sectors of the Republic’s economy are processing industry, including oil refining and food processing (about 21% of the GRP), and agriculture and forestry (18%). The Republic’s GRP has been growing at an average rate of 7% during 2003-2006 and in terms of growth it has become one of the leading Regions in the Privolzhsky Federal District (consisting of 14 Regions) in a number of areas such as direct investment, SME output, retail sector and average salary.

The budgetary performance of the Republic has also been sound and improving over the last several years and its operating surplus averaged 12% during the period of 2002-2008. The Republic’s total revenues grew at an average annual rate of 25% during 2003-2008 and exceeded RUB13.5 billion (USD$483 million) in 2008. This growth was driven mainly by own-source tax revenues that have increased 6-fold in nominal terms over the period of 2002-2008 driven by economic growth and improved tax administration and collection.

The total project cost is estimated at RUB 1,024 ($36.6 million) The proposed IFC investment is a senior local currency A loan of RUB 450 million (approximately $16.1 million) with up to 7 years maturity and 2 years grace period.

13.42 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	13.42
Equity

* These investment figures are indicative

The Republic of Mariy El is located in the European part of Russia, in Volga region West of Moscow and bordering Chuvash Republic in the South West. Roads to be rehabilitated under the Project are located throughout the Republic and mainly cover rural roads forming part of the core republican road network.

The Project will support the economic growth and private sector development in a frontier region in Russia linked to:

- lower road transportation costs and conservation of road network assets;
- increased road safety and improved access to public transport;
- better cost effectiveness of the Republic’s road investments; and
- demonstration effect.

The following are the expected development contribution of the proposed WBG engagement:

- implementation of improved road sector management by the Republic;
- Advisory Assistance to improve the Republic’s road management and E&S practices; and
- access to long term financing that is otherwise not available currently in the market.

This is a Category B Project because of limited E&S impacts. The Project’s main impacts will be improvement in the Republic’s core road network to the benefit of the broader population and minimal or no negative effect with respect to environmental or social impacts, land acquisition, natural resources or cultural/indigenous people are foreseen. E&S impacts are assessed and will be managed in line with Russian regulatory requirements and IFC Performance Standards. The road authorities will strengthen the internal capacity to assess and manage broader environmental and social risks of the road maintenance and upgrading projects through training facilitated by IFC of the employees, road designers and selected contractors in social, environmental and safety management and monitoring.

The summary of IFC’s environmental and social review findings for the Project, including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS).