Peru will boost competitiveness through road network improvement with help from IDB

The program will benefit 4.1 million people living in locations throughout the 39 provinces adjoining departmental road network’s road corridors.

The Inter-American Development Bank (IDB) has approved a US$114.3 million loan to improve and maintain the departmental road network, helping reduce transport operation costs and travel time.

During last decade Peru’s government released several plans for the transport and logistics areas to promote infrastructure investments in the country’s productive sector. These included the Plan for the Development of Transport Infrastructure, Services and Logistics at Subnational Level (PROREGION). This plan was a key component of moves launched to improve feeding road corridors (FRCs) to enhance connectivity between production hubs and national logistics corridors or collection centers in order to support efforts to boost infrastructure as well as the creation and consolidation of nontraditional-goods’ value chains.

One of the challenges the country faces in its efforts to promote economic diversification is the low quality of its departmental road network (DRN), which raises freight costs and hampers productivity and exports. In the face of this situation, investment in sustainable infrastructure provides an alternative that helps foster economic growth, boosting regional economies competitiveness and generating jobs and income for the beneficiary population.

The 2020 Development in the Americas Report Launch: From Structures to Services – The Path to Better Infrastructure in Latin America and the Caribbean, stresses the region’s need to implement policies aimed at improving the efficiency of infrastructure investment and service regulation processes. In this context, both Peru and the region at large have a chance to consolidate regional value chains that are crucial for the generation of employment that is sustainable over time.

The new Proregion 1 program contemplates interventions in 12 prioritized FRCs of the RDN over a 2,387 km stretch of roads. These interventions will help improve access to logistics corridors, firming up resilience to natural disasters and climate change effects, increasing the amount of roads with adequate quality for the transport of persons and goods, cutting logistics costs, helping articulate value chains, and contributing to reduce inequalities through the generation of jobs.

The program will also include actions to promote institutional strengthening of regional governments, which have jurisdiction over the RDN, as well as actions to strengthen Provias Descentralizado, which is the executor of the Program. Of the program’s 4.1 million direct beneficiaries, 51% are expected to be women, 11% people with disabilities, and 52% people of native origin. Also benefiting will be producers, exporters and transport companies using the RDN, as well as Peru’s population at large.

The IDB loan will have an initial disbursement period of 5 years. It is for a 15-year term, with 6.5 years of grace, and an interest rate based on LIBOR.