$50 million loan to boost access to basic services, jobs and markets to reduce poverty and improve country’s competitiveness

Peru will invest in a program to help its rural population gain sustainable road access with assistance from a $50 million Inter-American Development Bank (IDB) loan.

The program is expected to facilitate rural population’s access to basic services, jobs and markets and contribute to reduce poverty and improve the country’s competitiveness by cuttings transportation costs on feeder roads connecting to logistical priority corridors.

The poor state of Peru’s current road network pushes up transportation costs and affects its competitiveness, the rural population’s access to social services and jobs, and goods’ access to production and consumption hubs. Although rural poverty may have several causes, one key factor helping to keep it in place is a deficient road infrastructure, including that of local tertiary roads.

The program will finance civil works to rehabilitate and improve 2,200 km of roads as well as construction work supervision and appropriate studies. Works will include technological improvements in order to build affordable roads and also road safety features. Half the roads will be local lanes in extremely poor areas, and the remaining 1,100 km will be feeder roads connecting with priority logistical corridors.

In addition to improving the tertiary road infrastructure in order to help combat poverty and boost up competitiveness, the Program will strengthen decentralized road management and support microenterprises performing maintenance work for the rehabilitated roads. It will also include gender-focus actions such as exploring opportunities to include women in tasks traditionally reserved for men.

The $50 million IDB loan has a 12.85-year term, with a 12.3-year grace period and a LIBOR-based interest rate. The project includes $50 million in parallel World Bank financing and $500 million in local funding.