Contributing to road integration in the Bolivian South

To finance the Bolivian South Integration Road Project, the Andean Development Corporation (CAF) today approved a financial operation for $190 million, comprising a $70-million loan for the Republic of Bolivia and a guarantee in favor of Banco do Brasil as agent of the Brazilian Export Promotion Program (PROEX). The bank will participate in the operation with $120-million loan on concession conditions.

This operation is part of a set of approvals totaling $625 million, decided by the XCVII Board Meeting in benefit of Bolivia, Colombia and Ecuador.

CAF Executive President Enrique García said that the positive effect of the execution of the project would be to permit Bolivia to build modern and adequate transport routes to strengthen its internal integration and integration with neighboring countries.

García said that the CAF gives absolute priority to physical infrastructure, which is a fundamental element for the socioeconomic development of South America. Infrastructure integration overcomes geographical barriers, forges closer links between markets, and creates new economic opportunities in the region.

The project finances the development and improvement of highways that are part of Bolivia´s integration and development hubs in the South American Regional Integration Infrastructure Initiative (IIRSA), particularly the Potosí-Tarija highway, also known as the Route of the Liberators, which is part of the Inter-oceanic Hub; and the Potosí-Cotagaita section which will eventually reach the city of Villazón to complete the high-altitude connection with Argentina.

The integration hubs will develop agro-industrial regions and encourage tourism in Bolivia and in Argentina, Brazil, Chile, Paraguay and Peru.

The South Integration Road Project is a component of the Bolivian government´s strategy to reactivate the economy and combat poverty. Its objectives are to: (1) provide permanent and safe road access to a large area of Bolivia; (2) increase local and regional activity in the localities through which the roads pass; (3) consolidate the main south-north transport corridor of the Bolivian road system; (4) provide paved roads for international traffic with Argentina, Brazil, Paraguay and Chile, improving the competitiveness of Bolivian products and services in the south of the country to cut costs and travel times.

The project´s social component is designed to promote productive capacities in sectors that benefit directly from the new roads.

The project is expected to generate indirect benefits for the population by reducing vehicle costs, shortening travel time, and increasing production in the economic sectors in the region such as viniculture, mining, agriculture and tourism. The paving of the roads will increase economic activity in general in terms of jobs and income.

The CAF is providing total financing of $220 million for the project, including $30 million previously approved for the development of the transport sector. The operation approved for the Republic has a 14-year term, with grace periods of up to four years. The guarantee has a term of 16 years with 3 1/2 years of grace.