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WASHINGTON, December 9, 1999 - The World Bank's Board of Executive Directors today approved a US$25.26 million loan to Papua New Guinea to continue to help restore and sustain the well-being of people made homeless by the 1994 eruption of the Rabaul volcano in the Gazelle Peninsula of the East New Britain province. The loan will help to enhance economic opportunities in the area.
The Second Gazelle Restoration Project will build on and complete the emergency reconstruction program initiated in 1995 by the Government. Much of the infrastructure facilities and services in the provincial capital of Rabaul and surrounding areas were destroyed by the volcanic eruption, and about 80,000 people, mostly poor, were displaced.
In the short-term, the project will focus on developing relocation areas which provide a sustainable livelihood for permanently displaced communities; establishing Kokopo as the hub and new provincial capital; and restoring the Rabaul regional port and key land, transport, and other public services.
For the longer term, the project will strengthen and diversify economic activity, particularly in agriculture; formulate an economic development strategy for the Gazelle Peninsula; and reinforce development planning capacity by integrating the local governing authority (Gazelle Restoration Authority) into the East New Britain Provincial Government.
"We are very proud of our partnership with Papua New Guinea, and most especially with the Provincial Government of East New Britain and the Gazelle Restoration Authority, whose commitment to the well-being of the local population and its implementation capacity has proved to be outstanding," said Keshav Varma, Director of the East Asia Urban Development Sector Unit. "This project gives us an opportunity to contribute to basic human development-to people who have lost livelihood and traditional homes and their economic and employment base. The challenge now will be to rehabilitate the economy in a culturally sensitive and socially sustainable way and to mitigate future risks of natural disasters."
The US$25.26 million equivalent loan will be on standard IBRD terms and is repayable in 15 years, including three years grace. This constitutes the first phase of a program totaling US$40.26 million, to be implemented over about six years.