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IDB supports decentralization in Chile with $300 million loan

The Inter-American Development Bank will support Chile’s regional investment program and decentralization process with a $300 million loan, the IDB announced today.

The resources will assist the development of the capacity of regional governments to plan, program, and allocate investment resources in accordance with the government’s social development objectives and regional development priorities.

Among the goals of the program will be improving the living conditions of the lowest income groups, strengthening the use of investment financing instruments at the regional level, and developing the capacity of municipalities and technical units to plan, evaluate, design and efficiently execute investment projects in a deconcentrated system

IDB project team leader Pablo Roldán said the program will "improve levels of coordination among various levels of government" and "open up opportunities for public participation, accountability and control."

In addition to deepening decentralization, the program, to be carried out by the Undersecretariat for Regional and Administrative Development,* will finance projects in education, health, sanitation, rural roads, urban street paving, rural electrification and telephony and flood protection, among other investments.

Financing will also be provided for studies and advisory services to support implementation of the government’s decentralization strategy in the short and medium term.

The total cost of the program is $500 million. The IDB loan is for a 25-year term, with a 5-year grace period, at the variable interest rate, now 7.03 percent. Local counterpart funds total $200 million.

Since 1984 the IDB has supported Chile’s decentralization strategy with three previous loans totaling $410 million.

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