The Inter-American Development Bank (IDB) has approved a $150m loan to Guatemala for implementing an improvement and rehabilitation programme of roads connecting productive areas and departmental capitals to the main networks.
Implementation of the programme will allow sustained transit of goods and people, contributing to improving productivity by expanding access to markets and social services in isolated communities where high poverty rates prevail.
Road transport is a key factor for productivity and trade in Guatemala, where 3.5 million vehicles travel each year, moving more than 24 million tonnes of goods.
Despite such high traffic, the road density in Guatemala – the relationship between the length of the road network and the country’s land surface – is below average in the Latin American region (15.5km² vs 22km/100km²).
In addition, bad condition of roads increases operational costs and transit times. Due to these factors, the country ranks 18th out of 23 countries of Latin America and the Caribbean in the Logistic Performance Index.
The improvement and rehabilitation programme is expected to benefit the transportation of goods by facilitating the flow of trade and promoting the economic and social integration of communities among themselves and with the country’s main network.
Moreover, paving works are expected to improve the quality of life by increasing the accessibility of communities suffering from restrictions on access to health and education centres, especially during rainy seasons.
These interventions will also help improve the country’s institutional capacity by incorporating management systems and better standards related to climate change resilient infrastructure, road safety and the generation of guidelines and good practices for the road planning.
The $150m loan is charged to ordinary concessional capital with a 24-year repayment term, a six-year disbursement period, a 6.5-year grace period, and an interest rate based on LIBOR.
The IDB is one of the main sources of long-term financing for the economic, social and institutional development in Latin America and the Caribbean.
The bank also conducts research projects and provides policy advice, technical assistance and training to public and private clients throughout the region.
Image: IDB approves $150m loan for Guatemala road project. Photo: Courtesy of Sebastien Gabriel on Unsplash.