The project will help reduce vehicle operating costs, increase travel speeds, reduce accident rates and will conduct studies on the impact of climate change on infrastructure. Other components include institution building, road maintenance and road safety.
Some 437,000 vehicles travel over the national road system, carrying more than 13 million tons of freight annually, of which more than 38 percent is foreign trade cargo.
“The competitiveness of Nicaragua's industry, agriculture and commerce depends on the effectiveness and efficiency of the transport system,” said Alfonso Salazar, the IDB’s project team leader.
“Road transport is indispensable for the integration of the productive regions to the national economy and the main link between productive sectors and export markets.” he added.
A major component of this project includes the improvement of 44.6 kilometers of roads from La Paz Centro-Malpaisillo (37.2 km), of the primary trunk network, in the departments of León and Chinandega; and the Miralagos-Cuyalí (7.47 km) highway, of the primary feeder network, located in the Department of Jinotega.
The country’s road network system is characterized by poor conditions of both paved and unpaved roads. This translates into high transport costs, posing an obstacle to national efforts to boost economic growth and reduce poverty.
According to data from the Ministry of Transport and Infrastructure (MTI) published in the Red Vial Nicaragua report of 2011, the road network has a total length of 23,647.1 km, of which only 3,150.8 km (13.3 percent) is paved.
The IDB financing consists of $19.6 million from the Fund for Special Operations with an amortization and grace period of 40 years and an interest rate of 0.25 percent; and $19.6 million from the Ordinary Capital for a 30-year term, a five-and-a-half year grace period, and an interest rate based on LIBOR.This is one of three loans to Nicaragua as part of the Transport Sector Support Program, which estimates a total investment of $75 million from the IDB.
Since 2004, the IDB has approved five operations totaling $179.1 million, through which it has contributed to improving travel conditions and safety on the national road network, integrating the country’s various regions, and promoting economic and social development.