In this report, we present key findings of an impact evaluation of the Rural Road
Rehabilitation Project (RRRP) in Armenia. The RRRP was originally conceived as part of a fiveyear,
$236 million Compact between the Millennium Challenge Corporation (MCC) and
Armenia designed to increase household income and reduce poverty in rural Armenia. The
Compact, managed by the Millennium Challenge Account with Armenia (MCA-Armenia),
included two projects: (1) the Irrigated Agriculture Project, which comprised irrigation
infrastructure rehabilitation, farmer training, technical assistance to water user associations and
postharvest enterprises, and access to credit for farms and agribusiness; and (2) the RRRP, which
is the subject of the present report.
Background. Originally funded at $67 million, the RRRP was designed to rehabilitate up to
943 km of rural roads, or 35 percent of the government-proposed lifeline road network (LRN).
These 943 km comprised 85 road links. According to the Compact, approximately 360,000 rural
inhabitants in 265 rural communities would benefit from the RRRP. The project was projected to
reduce transport costs for the greater rural community, including farmers and processors, by an
estimated $20 million per year beginning five years after material project benefits were realized
(MCC 2011). In late 2007, rehabilitation targets were reduced by over two-thirds—from 943 to
297 km—due to the dramatic devaluation of the U.S. dollar against the Armenian dram and
construction price escalation (Socioscope 2010).
In 2007, construction of the pilot phase began, during which 24.4 km of roads in the marzes
of Aragatsotn, Shirak, and Lori were rehabilitated with MCA funds. The original rehabilitation
designs for these roads sections were completed by the Lincy Foundation. The MCA-Armenia
RRRP team reviewed these designs and supervised the Armenian Road Directorate (ARD) as it
paved and improved drainage systems for these pilot roads. However, in June 2009 the MCC
Board made the decision to discontinue funding any further road construction and rehabilitation
under the Compact due to concerns about Armenia’s democratic governance. Starting in 2009,
the Armenian government accessed loans from the World Bank to rehabilitate many road
sections that were included in the RRRP plans before MCC discontinued funding, using and
updating the road project designs developed by MCA-Armenia. From 2009 to 2011, the World
Bank approved over $100 million to rehabilitate a total of 430 km of rural roads, most of which
came from the original 943 km planned in the Compact. To complement these loans, the
Republic of Armenia invested $16 million to rehabilitate key sections of the LRN, starting in
2009. The Armenian Road Directorate managed all World Bank- and Armenian governmentfunded
rehabilitation efforts, with assistance from international consulting firms and World Bank
technical staff. As of December 2013, 446 km of roads had been improved with World Bank
funds (World Bank 2013), and approximately 50 km of roads had been improved with Armenian
government funds.
The Armenian government initially received a $25 million World Bank loan to rehabilitate
road sections. In August 2009, the World Bank approved additional financing of $36.6 million in
loans to rehabilitate another 146 km of LRN, and in 2010, the World Bank approved another $40
million in low-interest loans. This brought the Bank’s total lending for road rehabilitation of over
$100 million to rehabilitate a total of 430 km of rural roads from the original 943 km planned in
the Compact. As illustrated in Table I.1, the final MCA-funded portion of the RRRP was $8.4
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million, compared to the final World Bank–funded allocation of over $100 million and the
government of Armenia’s contribution of $16 million.
Table 1 summarizes the planned investments by MCA-Armenia and the investments
ultimately made by MCA-Armenia and the World Bank, and Figure 1 summarizes the RRRP
timeline. As illustrated, completed World Bank–funded rehabilitation of 446 km of rural roads
far exceeds the final MCA-funded rehabilitation of 24.4 km of roads, but is less than half of the
original target of 943 km of rehabilitated roads cited in the Compact. Although most road
rehabilitation was ultimately funded by the World Bank, from this point forward we refer to all
road links that were originally planned to be rehabilitated by MCA-Armenia as part of the RRRP
for expositional simplicity.