One of the main objectives of the Municipal Development and

By Dustin Rogers,2014-05-14 06:14
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One of the main objectives of the Municipal Development and

    Municipal Development Fund of Georgia

    The Municipal Development Fund of Georgia (MDF) was established on the 7-th of June of 1997, under the “State Program for the Development of the Municipal Sector”. It is a legal entity of public law. Under the Municipal Development and Decentralization Project with the World Bank financing and support the Fund has implemented 99 investment projects in the municipal infrastructure with the total cost of GEL 39.2 million. Through above activities the Fund has materially benefited to the development of the municipal infrastructure in the country. In 1997-2004 the Fund has assisted twenty Municipalities in the preparation and implementation of the investment projects, though concurrently with the increase in the demand for the services rendered by the MDF, the Fund will in future extend its activities countrywide.

    By the end of the Year 2002 the MDF has fully disbursed the funds provided under the Municipal Development and Decentralization Project I. Owing to the achievements in the Project stimplementation, on the 1 of August, 2002 the World Bank Board of Directors has made a decision

    on launching the Municipal Development and Decentralization Project II, for which purpose the World Bank International Development Association will allocate additional funds for the implementation of the investment projects in the municipal infrastructure.

    The Fund has successfully handled its tasks and to date represents a sound, self-sustainable financial institution operating as a revolving fund. Under the Municipal Development and Decentralization Project II, in 2003-2006 the Municipal Development Fund shall carry out investments and technical assistance activities at least in twenty local governments.

    MDF is governed by the Supervisory Board, which is approved by the Presidential Decree; members of the Board are representatives of the Government of Georgia, relevant Services of the President of Georgia and Local Government and Self-government Bodies. The Supervisory Board makes final decision on the financing of the Municipal Investment Projects.

    Key Goals and Objectives of the Fund

    The main objective of the MDF is mobilizing funds from international financial institutions, donor agencies, central and local governments, and making them available to Local Governments and Self-governments for investments in the municipal infrastructure and services. The Fund also assists the Local Self-governments in management optimization and introducing international experience into the local self-government field. The Fund constitutes an additional source of funding for financing of projects to be implemented under the responsibility of the Municipalities. Its structure perfectly meets the demands of Local Self-governments, which lack access to management expertise and financial market.

    Review of the Year 1997-2004 Activities

    The Fund has made GEL 39.2 million investments in 1997-2004. The activity of the Fund is a considerable step made towards improvement of municipal infrastructure in the country, particularly in view of the actual outputs expressed in the development of the city road infrastructure, improved operation of the water supply system, enhanced quality of services provided by the educational and

    health institutions and generation of employment opportunities. Average duration of the investment projects implemented in 1997-2004 - 4 months, average volume GEL 450 thousand.

    The Municipal Development Fund has implemented 99 projects in 12 cities of Georgia. Per sector diversification of the investment portfolio of the Fund is as follows:


For the purpose of the road infrastructure improvement the projects implemented by the Municipal 2 of the road pavement, with the Development Fund envisaged rehabilitation of about 695 thousand m

    total length of 40.000 m., which has significantly contributed to the city internal road improvement countrywide. The Projects implemented by the Municipal Development Fund will serve around 160 thousand vehicles daily.

    The investment portfolio of the Municipal Development Fund includes 66 projects with the total cost of GEL 24, 9 million carried out for the purpose of improving road infrastructure.


    In view of the problems currently existing in Georgia in the above-mentioned field improvement of water supply systems and sanitation is considered as one of the priorities of the Municipal Development Fund Investment Pipeline. To this end the MDF activities cover 23 Projects, which have improved water supply to 200 thousand households. Investments carried out by the Fund have resulted in material decrease of water losses, increase of water supply efficiency, and substantial solution of the water supply problem in the municipalities.


    Rehabilitation of public facilities is one of priority objectives of the Municipal Development Fund. For this purpose heating systems were installed in 51 secondary schools of Tbilisi City, and Secondary School #1 was constructed in Ambrolauri. The above Projects are aimed at improving educational and work conditions for 70 thousand pupils and 3 thousand teachers. Project implementation in the Health Sector has caused amelioration of requisite conditions in the hospitals with annual capacity of 30 thousand patients. GEL 4.6 million investment was made under the mentioned projects.


    The Municipal Development Fund has made investments targeted at improving urban transport infrastructure. The Project for Improvement of Electric Transport in Tbilisi is notable in this connection. The above Project will promote the safe and unhampered operation of the City Metro, serving 110 million passengers annually. Under the circumstances these Projects will significantly improve the operation of the Tbilisi City urban transport infrastructure. The volume of investments made in urban transport infrastructure amounts to GEL 1.5 million.


    Two projects implemented in this sector in Batumi are: Construction of the 450 m landfill retaining wall on the river Chorokhi, which has solved the Black Sea pollution problem in Adjara Region; and

    purchase of ten garbage collecting vehicles. Total volume of investments amounts to GEL 1.1 million.


    For the purpose of improving the above mentioned services the Fund has implemented 4 projects, with the total cost of GEL 2,928,000. Project implementation consequently resulted in introducing new system of lighting, which will save the City budget GEL 650 thousand annually. Moreover, the Fund has completed the Project for refurbishment of elevators in apartment houses in Tbilisi, which serves 13 thousand city inhabitants.

    The activities of the Municipal Development Fund have significantly promoted successful solution of poverty eradication problem in the country. About 5 thousand individuals were employed for 99 investment projects implemented by the Fund.

    The Fund will further seek to improve performance of the Local Government and Self-government bodies through undertaking their institutional development supporting measures, as well as priority investment projects required for urban infrastructure development.

    Long-term Strategy of the Municipal Development Fund

    One of the main objectives of the Municipal Development and Decentralization Project was to establish MDF as a financial institution revolving fund, which would be focused upon the long-

    term socio-economic and institutional support to Local Self-governments and the decentralization process in general.

    The MDF has created a material prerequisite for its establishment as a sustainable financial mechanism. Qualitative and quantitative analysis of the Fund’s financial activities for the years 1997-2004 points out, that one of the principal objectives of the Municipal Development and Decentralization Project establishment of the Fund, a sound financial institution operating as a

    revolving fund is achieved.

    The Municipal Development Fund has chosen a long-term development strategy, which manifests in qualitative and quantitative growth of MDF investments and efficient management of the Fund’s financial assets that stimulates keeping the pace of the sound and sustainable development. Activation of the principal activities of the Fund has stipulated the increased number of Clients (Municipalities) willing to closely cooperate with the Municipal Development Fund.

    By the Municipal Development Fund Georgia has acquired a financial institution, which will be permanently focused on the development of municipal infrastructure countrywide and supporting the ascending role assumed in economics to the Local Governments and Self-governments.

    The MDF attaches special importance to cooperation with International Financial Organizations, Donor Agencies and other International Institutions.

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