Georgia hopeful for the second MCG round
14 April, 2011
Georgia hopeful for the second MCG round

After successfully completing of five-year Millennium Challenge Georgia Fund, when a USD 395 million-worth grant compact was handed to Georgia in the frames of US government-supported Millennium Challenge Corporation, Georgia is waiting for the second MCG round. The follow up of the MCG compact is supposed to appear by 2012. The volume and priorities of the upcoming grant project is still under consideration.
Georgia got through with the USD 395.3 million worth five-year compact administrated by the Millennium Challenge Georgia

Fund (MCG) starting 2006 up to this April. The compact was designed to reduce poverty and stimulate economic growth in region via five projects as following: energy infrastructure rehabilitation project, regional infrastructure development project, Samtskhe-Javakhseti road rehabilitation project, Agribusiness Development Activity (ADA), and Georgia regional development fund project.
The MCG allowed the rehabilitation of key regional infrastructure and enterprise development through these  programmatic activities. The Samtskhe-Javakheti Road rehabilitation project has repaired 220 km of road, improving access to markets in Tbilisi and serves as a key regional transport corridor and border crossings with Turkey and Armenia, facilitating international trade transit in Georgia and in the South Caucasus. It now takes 2 hours and 42 minutes to travel the road compared to 8 hours and 13 minutes.
The ADA gave grants to improve the economic performance of 280 agribusiness and farm production projects, resulting in 2,867 jobs as of January 2011, benefitting over 100 thousand people. Businesses thus far report an increase in wages of almost USD 3.2 million and an increase in firm income of USD 3 million.
The rehabilitation of 22 sites of the main gas pipeline has improved regional and municipal service delivery providing increased energy reliability and security throughout the country.
In frames of the Georgia Regional Development Project (GRDF), a ten-year investment fund now in its fifth year, USD 27.8 million has already been invested up to date in 12 small and medium enterprises primarily in the agribusiness and tourism sectors, and has realized revenues of USD 7.1 million. Several other investments will be funded out of these revenues and the remaining GRDF capital commitment prior to the end of the investment period in September 2011. Proceeds from the account will support a scholarship fund for Georgian student and faculty exchanges.
Fifty million dollars of Millennium funds will be spent in frames of Regional Infrastructure Development Activity (RID) to rehabilitate infrastructure that increased reliability of water supply thus reducing coping costs for residents and businesses (i.e., buying and operating their own water pumps or digging their own wells.) Funding and construction delays with other donor-funded projects are such that in three of the five cities, some projects will not be completed until after Compact ends.
The compact faced some problems in keeping timetables  and fulfillment of the project in the negotiated terms was under threat [due to incompetent management of the now fired CEO of MCG.], a non-governmental Economic Policy Research Center (EPRC) having been monitoring the MCG compact since the commencement of the project, warned by the end of the past year. According to the CEPR, the MCG project had some transparency problems; it hardly escaped a failure past summer and faced a USD 31 million loss ultimately due to postponed timetables.
The new management could shoot problems and save the program so that the MCC board as well as Georgian government gave a positive assessment to the project dubbing it as one of the most successful international projects ever implemented in Georgia. And the country along with Ghana is hopeful for the second MCG round supposed to launch in 2012, Giorgi Abdushelishvili, the CEO of the MCG, told Georgian Journal. However the volume and priorities of the second round are under vision at the moment.
“5years ago many people could not believe that this project might be realized. 5 years ago, we had a lot of controversy about how to carry out or which projects to submit to the USA Government in order to receive funding from MCC,” Nika Gilauri, Prime Minister of Georgia, stated during the MCG closeout ceremony on March 30, 2011.
He stressed that to the MCC Georgia is one of the exception countries who first accomplished the entire carried out project.
“As for the future, we have a guarantee that the MCC will fund the second part of financing for Georgia. At present time we are collaborating with the MCC and in the coming 3-4 months we will know about the future projects. We have submitted the following projects: American University and the Goderdzi road (extension of Samtskhe - Javakheti road to Batumi),” Gilauri said.

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