The main objective of the project is to improve transparency, financial sustainability and delivery of targeted municipal services in the participating municipalities by providing sub-loans to municipalities for investments in revenue-generating public services and other investment projects of high priority to municipalities and with cost savings potential. These investments will contribute to the improvement in performance in service provisions and strengthening municipalities’ functions and competences as regulated by the Law on the local self-government units.
Target Group (Project Beneficiaries)
The project will encompass these municipalities that are approved for the second phase of fiscal decentralization and which, according to the Law on financing of local self-government units and the Guideline on the borrowing method and the procedure of the municipalities and the public enterprises in the Republic of Macedonia, issued by the Ministry of Finance, fulfill entirely the conditions for long term borrowing.
Component A: Municipal Investments (US$ 64,25 million)
This component would provide loans to municipalities that are eligible to borrow.
The following activities are eligible for financing:
- Water and sanitation services: finance for civil works, equipment, and consulting services to rehabilitate water and sanitation services, including for source and consumption metering, leak detection and repair, network rehabilitation and optimization, pressure zoning, and equipment for operations; and urgent rehabilitation and repair of selected sewers, sewer maintenance equipment, and pipe replacement.
- Solid waste management: finance for collection infrastructure and support equipment, such as collection bins, support vehicles, and other related equipment and consulting services; and to a limited extent, civil works and equipment to upgrade existing disposal sites to meet minimum sanitary standards.
- Other revenue-generating or cost-saving investments: finance for civil works, equipment and related consulting services for upgrading and/or expanding of other services or facilities under the responsibility of municipalities, such as public lighting, storm water drainage systems, urban transport systems, green markets, or insulation of public buildings to lower energy consumption or otherwise enhance efficiency.
The project will not finance :
- water treatment plants,
- extension of sewerage systems,
- works related to the new and existing waste landfills.
Terms of on-lending of funds:
- Interest rate: six months LIBOR for Euro plus the variable spread,
- Grace period: maximum 3 years,
- Repayment Date: maximum 10 years.
On-going tender procedures:
Component B: Capacity Building and Institutional Reform – (US$ 2,95 million)
This component includes consultancy services and technical assistance for the municipalities for sub-project preparation, local capacity building, and national level institutional strengthening.
Component C: Performance-Based Investment Grants – (US$ 5,6 million)
This component provides grants to municipalities as an incentive and reward for implementation of reform initiatives aimed at performance improvements in service delivery. Performance grants will be awarded based on achieving at least 4 of the 7 listed criteria, after verification of criteria implementation. The amount of the awarded grant is related with the amount of the loan for the appropriate municipality and it may reach to 20% of the total amount of the sub loan. The grant funds may be used solely for the financing of investment projects.
Component D: Project Management, Monitoring and Evaluation – (US$ 2,2 million)
Main contacts of the Project Implementation Unit of the MSIP Project:
Lead Project Coordinator
telephone: +389 2 3255738, +389 72 796 660
Financial Management Specialist
telephone: +389 2 3255736, +389 75 402 104
Legal and Procurement Coordinator
telephone: +389 2 3255735,+389 75 317 670
telephone: +389 2 3255733, +389 75 317 673
telephone: +389 2 3255732, +389 70 315 356
telephone: +389 2 3255737, +389 72 272 933
telephone: +389 2 3255790, +389 70 379 835
telephone: +389 2 3255664, +389 72 796 632
telephone: +389 2 3255490, +389 72 796 659
telephone: +389 2 3255714, +389 75 406 597
telephone: +389 2 3255521, +389 72 796 633
Administrative assistant/ Translator
telephone: +389 2 3255734,
Administrative/ Operative assistant
telephone: +389 2 3255731, +389 70 315 349
telephone: +389 2 3255772,
telephone: +389 2 3255772, +389 72 796 658
Significant documentation related to the implementation of the project: