The Inter-American Development Bank (IDB) has approved a $175 million loan to widen approximately 35 kilometers of the El Rancho–Teculután section of northern Highway CA-9 in Guatemala. The program is a strategic and crucial step towards expanding the country’s main route for exports, a process already in progress.
The engineering works will benefit the approximately 25,281 people who travel this section of the highway daily and will give better road access to 442,375 people in the departments of El Progreso and Zacapa.
By widening the road, Guatemala can boost the competitiveness of value chains with high potential for job creation and bolster the country’s exports. The project will fuel growth and reduce poverty by increasing the region’s productivity and integration.
Highway CA-9 is the main artery connecting the center of the country with the rest of the world. It provides access to the borders with El Salvador and Honduras and also connects the country’s industrial areas with the ports of Santo Tomas de Castilla and Puerto Barrios in the Atlantic, linking Guatemala to U.S. and European markets.
Guatemala has the highest logistical costs in Central America, and it faces the challenge of improving the quality of the roads that move almost all of its exports. Foreign trade contributes 41% of Guatemala’s GDP, and the road construction work will allow to expand its agribusiness exports, which in 2020 made up 72.1% of total exports in terms of its balance of trade.
The total cost of the program is $175 million: $75 million will be financed by the Bank and $100 million will be funded by the Spanish Agency for International Development Cooperation (AECID) as part of the FONPRODE program under the Co-Financing Framework Agreement between the IDB and the Kingdom of Spain.
The IDB loan will be disbursed over a period of five years. It has a 23-day repayment term and a 7.5-year grace period, with an interest rate based on the Secured Overnight Financing Rate (SOFR).
About the IDB
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 projects and provides policy advice, technical assistance, and training to public- and private-sector clients throughout the region.
IDB Team Leader