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IDB approves $19,532,000 for municipal development in Guatemala

The Inter-American Development Bank today announced the approval of a $19,532,000 loan to Guatemala to help finance the first phase of a six-year, $65.9 million project to strengthen the country´s municipal sector and its principal municipal support agency.

The resources will assist the government in promoting a more equitable and efficient system for providing and financing municipal services and will support reforms in the Instituto de Fomento Municipal (INFOM)* in order to improve its efficiency, internal procedures, and financial sustainability.

In addition, the project will support development of a municipal strategy at the national level, promote the competitive supply of private financing and services to municipalities, strengthen municipal capacity, and finance infrastructure investments.

The first IDB loan is for a 20-year term, with a 3.5-year grace period, at the variable interest rate, now 6.84 percent. Local counterpart funds for the operation’s first phase total $5 million.

A second IDB loan of $33.1 million is expected to be approved to support the second phase of the project, following completion of a number of project investment goals and policy reforms agreed to between the Bank and the Government of Guatemala. The second phase is expected to begin in three years.

The operation continues strong support the Bank has provided Guatemala over the past four years to support local development and decentralization. In that period the IDB approved $333 million in financing for investments that support the peace process, poverty reduction, housing, infrastructure, and planning

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