Inter-American Development Bank (IDB) approved a loan for $71 million to help Ecuador carry out a housing project for low-income families in the city of Guayaquil.

The project, which will be implemented by the Ministry of Housing and Urban Development, will provide grants and access to mortgages for thousands of families living in overcrowded informal settlements in an environmentally protected area.

As a result of the operation, an expected 8,762 families will receive permanent housing in a new location that will be provided with improved sanitation and access to public services. Another anticipated benefit of the relocation will be a 30 percent increase in average family income as a result of better access to the labor market and savings in the cost of services such as water and healthcare.

The previous settlement area will be rehabilitated and made into an environmental protection area of 2,200 hectares. Program funds will also finance the establishment of public parks, including a park along the Daule River diversion channel.

Three urban centres that will be created for the relocated families will contain cultural centers, shopping areas, plazas, and playgrounds. Facilities will include libraries, meeting rooms, and public services such as civil registries.

The project will also support collaboration among institutions through the creation of an office to coordinate civil works and social support activities carried out by different ministries.

The loan was extended for a 25-year term with a five-year grace period and an interest rate based on LIBOR.The Ecuadoran government will contribute US$4 million to the project.