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Ecuador will improve prefeasibility studies for public works with IDB support

Loan for $40 million will help reduce the rate of project incompletion and delays

The Inter-American Development Bank (IDB) approved a $40 million loan to help the government of Ecuador conduct prefeasibility studies for public works.

The funds will enable the National Preinvestment Institute (INP) to increase the percentage of projects that have benefited from studies designed to demonstrate technical and economic feasibility (including environmental, financial, management and community participation factors, among others), and to reduce the rate of incompletion and delays.

“Feasibility studies are a proven and cost-effective tool for ensuring that a public works project will meet expectations and be completed with minimum delays,” said Javier Ramiro Reyes, head of the IDB project team. "Investments in prefeasibility studies translate into improved quality of life for citizens and more efficient use of public funds."

The IDB loan is expected to help INP to reduce the percentage of civil engineering projects that are delayed in their execution from the current rate of 43 percent to 26 percent by 2014, and to raise the percentage of projects with preinvestment studies from the current 31 percent to 38 percent.

The funding will also allow the INP to develop and implement project evaluation methodologies to strengthen its institutional capacity and increase efficiency. This will include developing a manual setting forth procedures for rules and regulations in the preinvestment cycle.

The INP, an autonomous entity within the Ministry of Planning and Development, was created in 2008 by the government to coordinate, implement, and certify preinvestment processes. Its creation, which was part of a reorganization of the National Planning System, was carried out by the government to bring greater efficiency to increasing investments in public works.

The IDB loan is for a 25-year term with a grace period of five years and a variable interest rate based on LIBOR.