Argentina: US$150-million loan for road corridors

Promoting South American integration with $150-million financing for Argentina

The Andean Development Corporation and the Argentine government today signed an agreement to grant a $150-million loan to finance the Integration Road Corridor Program Phase I with a total investment of $243 million. The program responds to a series of projects identified by the South American Regional Integration Initiative (IIRSA) designed to promote the physical and economic integration of the region with a view to achieving highly competitive sustainable development.

The agreement was signed by CAF Executive President Enrique García, Argentine Production and Economy Minister Roberto Lavagna and Planning, Public Investment and Services Minister Julio de Vido. The purpose of the program is to improve and modernize critical sections of the freight corridors of the integration and development of the four hubs that affect Argentina: Capricorn, MERCOSUR-Chile, South (Meridional) Hub and South Andean Hub and includes strategic works in Argentina’s main connections with each of its neighbors.

The program covers investments in the provinces of Formosa, Salta, Santiago del Estero/Chaco, Santa Fé, Corrientes, Mendoza and Córdoba, and preinversión studies in Jujuy province.

The executive president said that the operation had special significance because it opened new integration spaces in the South American region through road corridors that connect Argentina with Bolivia, Brazil, Chile and Paraguay.

The program has a total cost of $243 million, of which 62% is to be financed by the CAF and 38% by Argentina. The executing agencies are the Ministry of Federal Planning, Public Investment and Services through the National Road System Department, and the Ministry of Economy through the Secretary of Economic Policy. The loan has a ten-year term with three years of grace.

According to the plan and studies, the program will have a direct impact on 8.5% (3,250 kilometers) of the 30,632-kilometer National Road Network. The projects will improve economic integration with Bolivia, Brazil, Chile and Paraguay, through new works, reconstruction and repaving of major road corridors and border passes, modernization of bi-national border centers, as well as studies for the rehabilitation of two rail lines: Jujuy-La Quiaca (Bolivian border) and Laguna La Picasa.

This is the first CAF financial operation in favor of Argentina, which became a shareholder in 2002. Argentina forms part of four of the ten integration hubs defined by the IIRSA: Mercosur-Chile; Southern (Meridional) in the provinces of Talcahuano-Neuquén-Bahía Blanca; Capricorn formed by Antofagasta-Jujuy-Asunción-Porto Alegre; and the River Plate hub.

The CAF will finance the paving and execution of roads in the Formosa-Salta corridor, Capricorn hub; Corridor to Paso Pehuenche, MERCOSUR-Chile hub; Centro de Frontera Paso of Libres Uruguaiana; Route change of the road in Laguna-La Picasa and the Malargüe-Límite road with Neuquen Route No. 40 South in Mendoza.

Since the start of the IIRSA initiative, the multinational financial institution has financed 33 investment programs and projects included in this vision of South American integration, contributing over $1.50 billion in funds out of a total investment of over $5.60 billion.