An IDB loan will finance the rehabilitation and expansion of key stretches of the road network in a state that generates a third of Brazil’s GDP

The Inter-American Development Bank (IDB) announced the approval of a $480 million loan earmarked for the state of São Paulo’s highway investment program.

With 41 million people, São Paulo is Brazil’s most populated state. It generates a third of the country’s economic output. The state is home not only to the country’s largest city, São Paulo, but also to its biggest port, Santos, which handles a fourth of Brazilian exports.

About 75 percent of goods are transported in São Paulo are shipped by truck. Of the state’s 36,000 kilometers of paved roads, 5,000 kilometers correspond to divided (dual carriageway) highways. The state has a maintenance program but heavy use and strong growth in the number of motor vehicles make it necessary to rehabilitate and widen existing roads.

Under São Paulo’s highway investment program, to which the IDB made another $480 million loan last year, about 500 kilometers of roads will be upgraded. The loan will also finance engineering studies, logistical planning and measures to improve road safety.

The new loan is for 25 years, with a 5-year grace period and a LIBOR-based interest rate. Local counterpart funds for the program will total $206 million.