The Inter-American Development Bank (IADB) has approved a US$3bn 25-year loan from development banks and government institutions for the development of the Mário Covas Rodoanel highway in São Paulo.

The facility comprises a US$1.15bn loan from IDB, a $980mn loan from the federal government and US$890mn from the São Paulo state government. It carries a five-year grace period with a variable interest rate based on Libor.

The funds will be used to construct the 44-kilometre north section of the road, and will complete the 177-kilometre multiple-lane beltway − one of the largest and most critical transportation infrastructure projects ever undertaken in Brazil.

Following the completion of the north section in November 2014, a drop of 10% in the average daily volume of traffic is expected for the first year of operation, reaching a total drop of 13% by 2024.