News Releases

Nov 5, 2009

Paraguay will expand drinking water and sanitation services to small rural and indigenous communities with help from Spain and the IDB

$40 million in grants and $12 million in loans will improve living standards in communities of up to 2,000 people

The Inter-American Development Bank and Spain approved $52 million in financing to help increase access to drinking water and sanitation services in Paraguay's small rural and indigenous communities.

The funds include a $40 million grant from the Spanish Cooperation Fund for Water and Sanitation in Latin America and the Caribbean (the “Spanish Fund”) and a $12 million loan from the Bank's ordinary capital. This is the third project jointly funded by the IDB and the Spanish Fund, an initiative announced last year by Spanish Prime Minister José Luis Rodríguez Zapatero.

The Paraguay program will improve living standards among poor rural and indigenous communities of up to 2,000 people by extending water and basic sanitation systems coverage, promoting their sustainability, and developing a pilot program for solid waste management.

Approximately 400 rural communities with 32,000 families, and 40 indigenous communities with 3,200 members, will be provided with water and sanitation systems over a five-year period.

Some 2.5 million of Paraguay's 6 million people live in rural areas, where there are no sewers and where less than four out of every ten households are connected to water networks. The rest get their water essentially from manual extraction wells that frequently fail to meet hygienic standards.

The program contemplates the creation of sanitation boards in rural communities and sanitation commissions or other similar structures in indigenous communities, in order to run and maintain financially self-sustaining water and sanitation systems.

It will also help strengthen the project execution capacity of the National Environmental Sanitation Service (SENASA), the government agency that plans, executes, administers, and oversees water and sanitation activities in small communities.

The IDB and the Government of Spain signed an agreement in July 2009 to jointly finance and execute projects with a portion of the Spanish Fund’s grants. The partnership will take advantage of the IDB’s extensive portfolio of water and sanitation projects, as well as its network of sector specialists in country offices throughout the region, to rapidly and efficiently execute projects identified as priorities by Latin American and Caribbean governments.  

In addition to Paraguay, the IDB and Spain are jointly financing projects in Haiti and Bolivia, and are expected to announced projects in Brasil, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Peru, the Dominican Republic and Uruguay between now and mid-2010. In all, Spain will contribute $407 million in grants to these projects, while the IDB will contribute $213 million in grants and loans, while also assuming the bulk of the project preparation and execution costs. Governments in the region will contribute an additional $77 million in counterpart funds. Around 4 million people in low-income urban and rural communities are expected to benefit directly from these projects.

The Bank's loan to Paraguay is for a 25-year term, including a five-year grace period, at a variable interest rate based on Libor. The government of Paraguay will provide $8 million in local counterpart funds.

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