The Inter-American Development Bank (IADB) has given a US$17.5mn loan for the renovation of Honduras’s principal highway.

The loan has two tranches. The first is for US$12.4mn and has a variable rate of interest. It comes from the IADB’s ordinary capital fund and has a 30-year tenor, with a 72-month grace period. The second tranche is from the IADB’s fund for special operations (FSO) and has a tenor of 40 years; with pricing of 0.25%.The financing complements a US$30mn IADB loan for the same road in 2007.

The CA-5 Norte links the capital city of Tegucigalpa with Honduras’s main industrial area, San Pedro Sula and to Central America’s only deepwater port, Puerto Cortes on the Caribbean coast. Over the course of its lifetime, the project has also secured funding from the World Bank, Central American Bank for Economic Integration, Ofid and the US Millennium Challenge Corporation.

Daniel Torres Gracia, transport senior specialist at the IADB’s Honduran office, tells GTR about the benefit the loans will have on Honduran trade: “The loan will help ensure that the objectives of the CA-5 Norte rehabilitation project are met. This includes making Honduras more competitive and supporting the process of integration with countries of Mesoamerica by improving transportation conditions; reducing operating costs; and reducing travel times and accident rates in highway transportation.

“The specific objectives of the project are to improve the conditions for transporting passengers and goods on highway CA-5 Norte; and to improve road safety within Honduras. Transportation is of major importance to export expansion, economic growth, and in terms of its impact on infrastructure service delivery.”