The Diplomat
The Council of Ministers yesterday authorized the granting of a US$100 million (€94 million) credit to Guatemala for the development of the CA-9 North Corridor, an important Central American highway and the country’s main export route.
The purpose of the loan, under the Fund for the Promotion of Development (FONPRODE), is to co-finance the CA-9 North Corridor Development Program for the El Rancho – Teculután subsection. This is a loan to the State with a sovereign guarantee, for a maximum amount of US$100 million and a repayment term of 24 years.
The program will be co-financed by the Inter-American Development Bank (IDB), which will provide US$75 million, and by FONPRODE, which will provide US$100 million. This project is part of a broader program that would add, to the initial execution of the 35-kilometer El Rancho-Teculután subsection, the subsequent execution of the 45-kilometer Teculután-Mayuelas subsection, which will be fully financed by the IDB.
The main objectives of the Program are “to contribute to boost exports of strategic productive sectors, in a sustainable and inclusive manner”, and “to improve the service levels of the Corridor intervened with climate adaptation and risk reduction measures in the face of extreme climate events”, according to the Government. For their part, the General Directorate of Roads and the Municipality of Teculután specified that the Expansion and Rehabilitation Project of the CA-9 North Road seeks to improve the road’s infrastructure and facilitate mobility and traffic circulation, “improving the economic and social dynamics among the inhabitants of the surrounding towns”.
Guatemala is among the Middle Income Partnership Countries of the Spanish Cooperation policy, according to the V Master Plan 2018-2021 (V PD). Spain and Guatemala signed a Country Partnership Framework for the years 2021-2024, aligned with the 2030 Agenda and its Sustainable Development Goals (SDGs). In addition, this operation will be aligned with the objectives of Spanish Cooperation and contributes directly to the achievement of SDG 9 (Industry, Innovation and Infrastructure) and, indirectly, to SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth) and SDG 13 (Climate Action).
According to the IDB, road connectivity plays a key role in Guatemala’s productivity and trade. The National Road Network covers a large part of the national territory, exceeds 17,000 kilometers and mobilizes more than 24 million tons of merchandise per year, but a third of the routes are not paved. “In the case of the CA-9 North corridor, an important Central American highway and the main route for the country’s exports, its low capacity affects cargo transportation and increases travel times and logistics costs,” to the point of representing 40% for exporting companies, warns the regional bank.
On the other hand, and according to the Joint Financing Framework Agreement for the co-financing of operations with sovereign guarantee, signed by Spain and the IDB in 2017, FONPRODE must pay the IDB a commission of US$570,000 (more than 537,300 euros) for the costs of preparing and supervising the program. This payment was also authorized yesterday by the Council of Ministers. FONPRODE, in force since 2011 and administered by the Spanish Agency for International Development Cooperation (AECID), is one of the main financial instruments of Spanish Cooperation to eradicate poverty, reduce inequalities and promote gender equality, the defense of human rights and the human and sustainable development of impoverished countries.
