Press Release No. IFAD/36/2001

Rome, 14 November 2001 - The International Fund for Agricultural Development (IFAD) and the Government of Bosnia and Herzegovina today signed a loan agreement on highly concessional terms for financing the Livestock And Rural Finance Development Project. This IFAD-initiated project will have a total cost of USD 25.5 million. The Agreement was signed at the Fund's headquarters in Rome by the Vice President of IFAD, Mr. John Westley, and by His Excellency Dr Jadranko Prlic, Deputy Minister of the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina.

The IFAD loan is in the amount of USD 12 million. The contribution to be made by the Government of Bosnia and Herzegovina will amount to USD 5.6 million and the beneficiaries of the project will provide the equivalent of USD 2.9 million. Co-financing in the amount of USD 5 million is being negotiated with the OPEC Fund.

The Livestock and Rural Finance Development Project is IFAD's third operation in the state of Bosnia and Herzegovina. The two previous projects, the Emergency Farm Reconstruction Project- Re-Stocking Activities launched in 1996 and the Small Farm Reconstruction and Development Project launched in 1997, were designed to deal with the immediate post-war situation. They focused on livestock re-stocking through the importation of high quality cows from Western Europe and the local purchase of sheep and goats. These animals were distributed on a credit in-kind basis. These projects made an important contribution to the survival of many families in the immediate post-war recovery period.

In line with IFAD's desire to adopt a longer-term approach to poverty alleviation in the remote poor mountainous areas, this third project, over its 6-years implementation period, represents a transition from emergency aid towards sustainable development of the rural economy. The project aims at improving food security and income levels of the rural poor in some 16 of the poorest localities in the country through strategic focus on the livestock sector. The project will put particular emphasis on capacity building for technology development and dissemination; continued livestock distribution; easier access to market through micro-enterprises and the establishment of village-based rural finance system to improve access to rural financial services. In addition, the project will provide improvement to the social and physical infrastructure in the remoter parts through gender responsive and participatory processes.

The project will benefit around 21 000 small farming households among the resident and returnee population. It will help rural women and under-capitalised, small-scale commercial and part-time farmers to address the transition from subsistance to semi-commercial production. The vast majority of them have no or small livestock holdings, face severe marketing problems for fresh produce and lack access to financial services.

To date, IFAD overall commitment in Bosnia and Herzegovina, which includes three loans on highly concessional terms and two grants, amounts approximately to USD 32 million.

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IFAD is a specialised agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 584 projects in 114 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.2 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favourable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.