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IDB approves $150 million loan to Mexico for potable water and sanitation in rural communities

The Inter-American Development Bank today announced the approval of a $150 million loan to Mexico for a program that will provide potable water and sanitation services in rural communities.

The program, which will give priority to marginal settlements with fewer than 2,500 inhabitants, seeks to ensure the sustainable delivery of services using a self-management model that encourages active participation of its beneficiaries.

The National Water Commission (CAN) will coordinate the program, which will be carried out by municipal operators and state water and sanitation boards. Banco del Ahorro Nacional y Servicios Financieros (BANSEFI) will be the financial agent and local counterpart funds for the program will total $142.5 million.

The new program will build on the achievements of a similar program that was backed by a $310-million IDB loan approved in 1998. That program built, expanded or improved water systems in 3,900 rural communities and sanitation systems in 1,300 communities.

Most of the resources of the new loan will help finance the construction of potable water and sanitation systems, preferably in areas that lack these public services or have very low coverage. The program is expected to benefit some 900,000 people in 2,000 rural communities.

Each community’s studies and plans will have to be discussed and supported by local residents, who will have to make a formal commitment to run the systems and pay the fees or rates to cover operation and maintenance costs.

The program will finance the construction or improvement of catchments, wells, storage tanks, purification plants, distribution networks and household connections, as well as the purchase of pumps, control equipment and water meters. Sanitation projects will include single home solutions and collective systems for the collection and treatment of wastewater.

Around 2,000 community organizations will be established or strengthened and provided training in financial and administrative management so they may operate and maintain the services. Communities will receive health and environmental education programs as well as additional support after the water and sanitation services are transferred to them.

Municipal operators and state water and sanitation boards will be strengthened to improve their capacity for planning, promoting and developing the program and assisting rural communities.

The program will also finance pilot projects to devise financing and service delivery models for potable water and sanitation systems in small urban communities with populations ranging from 2,500 to 5,000 inhabitants.

IDB loans support some of Mexico’s principal social programs, such as Oportunidades, which makes cash payments to indigent families who keep their children in school and meet a schedule of medical checkups and vaccinations. It is also helping to finance the Habitat neighborhood upgrading program and the Procampo program for small-scale farmers.

The new loan is for 20 years, with a 66-month grace period and a variable interest rate.