Nicaragua to improve Pacific Corridor road network with CABEI funds

The Central American Bank for Economic Integration (CABEI) signed a US$38.6 million loan agreement with Nicaragua for the project "Rehabilitation and Improvement of the Empalme Nejapa - Empalme Puerto Sandino Highway Stretch." The financing is being granted on concessional terms with resources from the Mexican government’s “Infrastructure Fund for Mesoamerica and the Caribbean”.

The resources will enable the rehabilitation and expansion of 50.63 kilometers of paved roads, which will lead to savings in road maintenance costs, reduced vehicle operating and accident costs, as well as decreased travel time for travelers and merchandise.

At the signing ceremony, CABEI Director for Nicaragua Dr. Silvio Conrado said that this CABEI operation is intended to have a positive impact on the project’s target area and its inhabitants – approximately 59,752 people – by encouraging agricultural production and the tourism industry in the area and by facilitating transportation between production centers and the markets in Managua, León and Chinandega, thereby increasing revenue and reducing the poverty of the communities located in the area.

In addition, the disbursed funds will invigorate Central American trade integration by facilitating better regional communication and establishing improved connections with the ports of Acajutla in El Salvador and Puerto Cortés in Honduras.

The project is expected to create 200 direct temporary jobs in its first year of execution and 150 in its second year.

Director Conrado noted that once construction is completed, 24 direct road maintenance jobs will be created during the project’s useful life.

The Mexican resources from the abovementioned Infrastructure Fund, which is commonly known as the Yucatán Fund, will operate under a novel new financial mechanism, involving a donation for the acquisition of Zero Coupon Bonds, which will subsequently be used to repay the loan’s principal.

CABEI has financed a wide range of programs in Nicaragua with an emphasis on basic infrastructure. Over the past seven years from 2006 to 2012, CABEI has approved seven loans to Nicaragua, which are being executed by the Ministry of Transportation and Infrastructure, for a total of US$158.9 million.

Pursuant to the Bank’s 2010-2014 Institutional Strategy, "Competitiveness with Social Integration and Development," the Bank’s support from the project, “Rehabilitation and Improvement of the Empalme Nejapa - Empalme Puerto Sandino Highway Stretch," promotes its strategic axes of social development, competitiveness and regional integration, specifically targeting the focus area of productive infrastructure.

This project will support investment in road infrastructure, strengthening the coverage of services and basic needs of the inhabitants of the departments of Managua and León. In addition, this road is of particular regional significance because it is part of the Central American Pacific Corridor.