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El Salvador to boost regional trade through rehabilitation of Mesoamerican Pacific Corridor highway

IDB operation for $115 million will help reduce vehicle operating costs and improve highway safety 

The Inter-American Development Bank (IDB) approved a loan to El Salvador for $115 million for highway improvements in the Mesoamerican Pacific Corridor (MPC). The improvements will help to boost regional trade and increase the country’s physical integration and connectivity with the rest of the region.

The program will help reduce vehicle operating costs, travel times, and highway accidents. Highway transportation costs in Central America represent 30-35 percent of total logistics costs, which affects the region’s trade competiveness.

The program is expected to contribute to a 64 percent increase in exports, imports, and international transit of goods passing through the El Amatillo border crossing between El Salvador and Honduras. In 2010, 1.6 million tons of cargo passed through El Amatillo, an amount that is expected to increase to 2.6 million tons by 2019.

"The MPC is considered to be an essential interregional trade corridor and a gateway to the east coast of the United States and to Europe,” said Miroslava Nevo, IDB project team leader. “The project will improve the ability of the MPC to link productive areas, consumer markets, and trading infrastructure.

The MPC is a part of the 3,244-km Mesoamerica Project, which is the shortest route between the cities of Puebla and Panama. More than 300 km of this distance is located in El Salvador, between the La Hachadura border crossing in Guatemala and Amatillo.

The IDB’s loan was extended from the Bank’s ordinary capital for a term of 25 years, with a grace period of 5.5 years, and an interest rate based on LIBOR. The executing agency will be El Salvador’s Ministry of Public Works, Transportation, Housing, and Urban Development.

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