25 October 2009
A $150 million loan will help expand and refurbish the road network, putting the country on a stronger economic footing.
The Inter-American Development Bank today approved a $150 million loan to support Peru’s plan to maintaining and improve its primary roads network. The financing will help the Peruvian government carry out a counter-cyclical investment program to sustain economic activity and bolster growth.
Peru is developing a broad plan to upgrade its 24,000-km road network. In line with this goal, the government has selected 12 macro-projects to be carried out by public-private partnerships. However, given the plan’s scope, the country faces a $900 million financing gap for the period 2009–2012, which the IDB loan will help reduce.
The IDB will support Peru’s Highway Transport Sector Program, a $946.2 million investment plan to gradually pave more roads (currently about half of the network is unpaved) and provide more and better road maintenance.
The projects will help improve transportation between the country’s regions, promoting sustainable economic and social development. By 2013, over 10,000 km of roads should be in good condition, doubling the current level. Roads in poor condition will decrease by 62 percent to 4,262 km. These improvements could cut road maintenance and paving costs by 15 to 25 percent, while travel times for buses, trucks and cars could be reduced by 20 to 30 percent.
The activities planned under the program include:
- improvements to sections of key highways,
- improvements in transportation conditions on secondary roads and promotion of maintenance through level-of-service contracts,´
- a safe-roads program, and
- a program for bridges.
The new loan is for 25 years, with a four-year grace period and a LIBOR-based interest rate. The funds will be disbursed over a four-year period.