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IDB approves two loans totaling $96 million for Santa Cruz-Puerto Suárez highway corridor

The Inter-American Development Bank today announced the approval of two soft loans to Bolivia totaling $96 million to finance the first phase of the resurfacing and pavement of the strategic Santa Cruz-Puerto Suárez highway corridor and for a long-range environmental and social protection program to accompany the project.

An IDB loan of $75 million for the project’s first phase will finance the paving of the 124-kilometer Paraíso-El Tinto section of the corridor, as well as the rehabilitation of the 139-kilometer Raboré-El Carmen section and maintenance work on 88 kilometers of other sections.

A parallel loan of $21 million will promote environmental protection and a process of sustainable development in the area affected by the highway and mitigate the environmental and social impacts of construction. The Nordic Development Fund is providing $3 million in co-financing for this program, which will be carried out by the Ministry of Sustainable Development and Planning*.

The parallel loan will finance a broad land titling program aimed at protecting the rights of the low-income population located along the corridor; support the sustainable use of forests; strengthen the institutions of six municipalities; support the development of indigenous communities; and provide financial support for the management of protected areas.

During the preparation of the corridor project, a Strategic Environmental Assessment was carried out aimed at identifying and evaluating all of its long-term, indirect and cumulative impacts. This included a very comprehensive process of public consultations with affected populations and other interested parties.

As part of the environmental and social protection program, losses due to cessation of the right of way will be compensated, and cultural and archeological heritage will be protected.

Once the first phase of the highway construction project is completed, the IDB is planning to support a second phase of construction with a $70 million loan to help finance paving the remaining 227-kilometer Roboré-El Carmen-Puerto Suárez section on the new roadbed.

The program includes resources to assist the Servicio Nacional de Caminos** in the management, administration and execution of the corridor projects and the contracting of three special studies on strengthening management of the highway sector.

The Santa Cruz-Puerto Suárez highway corridor, which connects Santa Cruz with the eastern border of the country with Brazil, has long been recognized by Bolivia as critical infrastructure for continuing expansion of the country’s fastest-growing section and its linkage with important export markets and domestic consumer centers. The Department of Santa Cruz is the leading contributor to gross national product among the country’s departments, and it accounts for more than half the country’s agricultural production. Its continuing growth could alleviate population pressures in some of the densely populated Andean sections of the country.

The corridor project will reduce transportation costs and travel times, increase safety and provide employment for the population, reflecting the Bank’s strategy of increasing the country’s competitiveness and reducing poverty.

The Andean Development Corporation and the European Union are among the organizations co-financing the corridor.

As work on the corridor progresses, Bolivia, the IDB and other donors are expected to correct institutional, planning and maintenance deficiencies that have arisen in past road projects.

Both IDB loans are for 40-year terms, with a 10-year grace period, at an interest rate of 1 percent during the grace period and 2 percent thereafter. Local counterpart funds total $15 million for the first phase of the corridor project and 2.5 million for the social and environmental protection project.

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