IDB Finances Improvements to Drinking Water Services in Honduras with $70 Million to Reduce Inequality and Poverty

WASHINGTON — The Board of Executive Directors of the Inter-American Development Bank (IDB) has approved a $70 million Specific Investment Loan (ESP) to improve the quality of drinking water services in the Central District Municipality, thereby helping reduce structural factors that contribute to poverty and inequality in Honduras.

The operation will also strengthen the operational and commercial management of the Municipal Water and Sanitation Unit (UMAPS).

The Central District Municipality, which comprises the twin cities of Tegucigalpa, the country's capital, and Comayagüela, experiences a high incidence of waterborne diseases associated with inadequate access to safe water and poor water quality.

The program will benefit 345,000 people, including 110,000 direct beneficiaries and 235,000 indirect beneficiaries. In particular, low-income and vulnerable households will benefit from a more reliable and efficient drinking water supply resulting from improved service continuity.

Planned investments include hydraulic sectorization of the water distribution network and pressure management, including the replacement or installation of new pipelines, rehabilitation or replacement of obsolete infrastructure, rehabilitation, optimization, and expansion of pumping facilities, and the acquisition and installation of equipment to measure water volumes, flows, and pressure levels.

Additionally, the program will strengthen UMAPS' management capabilities to plan, operate, and expand the drinking water system through the adoption of digital tools and new methodologies, as well as institutional and technical optimization.

The $70 million investment loan includes $42 million from the Bank’s Ordinary Capital, with a 25-year term, a 5.5-year grace period, and an interest rate based on SOFR. The remaining $28 million comes from the IDB’s Concessional Ordinary Capital, with a 40-year amortization period and grace period, respectively, and an interest rate of 0.25%.