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Costa Rica to improve roads and ease traffic flow with IDB support

A line of credit of $350 million will finance investments in the Greater Metropolitan Area of Costa Rica so as to improve urban transport 

The Inter-American Development Bank (IDB) will offer Costa Rica a long-term line of financing for investment in sustainable projects to improve and expand parts of its Strategic Road Network, specifically to enhance development and the flow of traffic in the Greater Metropolitan Area (GAM). 

These investments are aimed at boosting the competitiveness of the metropolitan region around the capital San Jose and driving economic growth around the country. The GAM accounts for nearly 60 percent of all employment in Costa Rica. The cities of San Jose, Alajuela, Heredia and Cartago, which are linked by Highways 1 and 2,  generate half of all jobs and see almost 1.5 million people commuting to work each day.   

Nearly half of the workers in this greater metropolitan area work in a city different from the one in which they live. Public transport accounts for 27% of travel in the GAM and heavy traffic on major roads is discouraging people more and more from using it. Only 2.6 km of road for each 100,000 inhabitants are dedicated exclusively to public transport and only 55 percent of people in the GAM use it as they main way to get to work. What is more, the metropolitan area has only 500 m of bike lanes.  

The $350 million conditional line of credit will be handled with two transactions. The first sets aside $178 million for specific works, of which $125 million will be financed by the IDB and $53 million by the Ministry of Public Works and Transport through the National Road Council. The second operation earmarks $225 million to finance completion of new highway to San Carlos and works to complement Highways 1 and 2.  

The goal of the first operation under the line of credit is to improve and expand in an enviromentally sustainable way the High Capacity Road Network, and to support the development of road infrastructure projects through public-private partnerships as a complementary mechanism for financing and management. 

The specific goals of those projects are to make it cheaper for trucks to operate and cut travel time and pollution emissions by vehicles in general. The line of credit is also designed to improve the government's technical and institutional ability to develop transport projects through public-private partnerships.  

In order to minimize the risk of of road upgrades luring more drivers out onto the road, the program foresees the creation of a lane set aside exclusively for public transport. It also calls for the design of urban works that complement roads, which besides offering green areas promote the use of non-motorized vehicles and reduce the need for travel by linking roads to urban development. 

The operations also call for technical assistance to change the structure of the highway toll system so the money raised can be used to discourage people from driving, and to assess proposals in the public-private partnership arrangement for these roadways so as to ensure technical quality in the studies for this kind of project, which are more complicated. 

The line of credit is for $350 million, with a flexible financing facility and a reimbursement period of 25 years, a grace period of five and a half years and interest rate pegged to the LIBOR.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region. 

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Mauricio Bayona
IDB Project Team Leader
mauricioba@iadb.org