The Inter-American Development Bank (IDB) will support with a $70 million loan the first phase of a program to improve Panama’s road infrastructure and increase its competitiveness.
The loan is for a 20-year term, with a six-year grace period and a variable interest rate. Panama will invest $35 million in the first phase of the program. The IDB may approve loans totaling $100 million for the following two phases, in which Panama would invest an additional $70 million. The program will be carried out within the framework of the Plan Puebla Panama regional integration effort.
The program will finance the rehabilitation of priority highways as well as the introduction of new mechanisms to ensure a constant maintenance of the Panamanian road network. A specific goal of the program is to cut costs and travel time for the transportation of passengers and cargo on highways linking Panama’s production centers with its local and external markets, boosting the competitiveness of a key sector for the country’s economy.
The program also aims to help Panama sustain its network of paved highways through long-term, standards-based rehabilitation and maintenance contracts designed to preserve the road infrastructure. Under such mechanisms, contractors must maintain roads in better conditions than the base levels required by the government.
“The idea is to establish maintenance as a priority. This would represent a radical change for Panama, since it will preserve the value of their road network and contain the costs of future investments in highways,” said IDB project team leader Jose Agustin Aguerre.
“Contracts based on standards have had excellent results in Argentina, Brazil, Colombia and Uruguay, leading to the introduction of new technologies and improvements in the efficiency and quality of road maintenance work,” he added.
The program’s first phase is expected to rehabilitate around 315 kilometers of paved highways and ensure the constant maintenance of some 1,135 kilometers of priority roads.
Plan Puebla Panama is sponsored by Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama. Its projects include the rehabilitation and maintenance of Mesoamerican integration highways based on technical standards agreed on by the participating countries.
A long-standing initiative of the Latin American countries, the Inter-American Development Bank was established in 1959 as a development institution with novel mandates and tools. Its lending and technical cooperation programs for economic and social development projects went far beyond the mere financing of economic projects that was customary at the time. Today, the IDB is the oldest and largest regional development bank. It is the main source of multilateral financing for economic, social and institutional development projects as well as trade and regional integration programs in Latin America and the Caribbean.
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