Help Coming for Roads, Bridges

August 15, 2008

A regional bank is lending Costa Rica $850 million to rebuild roads and bridges, which are in an alarming state of disrepair.

Costa Rica has promised to match the loan from the Inter-American Development Bank with a $200 million investment, putting the total cash infusion into infrastructure at more than $1 billion.

The loan is the biggest the bank has ever given to Costa Rica and the third biggest that the bank has granted to any nation for transportation projects in the last eight years. Only Brazil and Argentina received more, said Fernando Quevedo, the bank’s representative here.

The bank, which was established in 1959 by the Organization of American States, awarded the loan last week.

Costa Rica must repay it within 25 years and can choose either a 5.64 percent interest rate or the fluctuating London Interbank Offered Rate, or LIBOR, the rate at which banks lend to each other, said Finance Minister Guillermo Zúñiga.

Once the Legislative Assembly approves the loan, Costa Rica will use it to construct and repair bridges, trains, highways, ports, airports, bicycle paths and sidewalks, said Public Works and Transport (MOPT) Minister Karla González.

Quevedo said investment in public works projects will help Latin America compete with other developing regions. “Our growth has lagged compared with countries in Asia because we stopped investing in infrastructure,” he said.

The bank, he said, decided to grant Costa Rica the loan because the country has had solid economic growth and a budget surplus.”

The economy saw a 5.9 percent growth rate in the first four months of 2008 and a $230 million surplus in the first six.

The money will go toward building 60 bridges along the

Inter-American Highway

and constructing a third lane along part of the highway between San Ramón, northwest of San José, and Barranca, on the Pacific coast, said González.

The ministry also intends to repair a highway that runs between the southern towns of San Vito and Ciudad Neily, and a highway from Bribrí to Limón along the Caribbean coast.

Sidewalks, bridges and bicycle paths will receive $50 million, González said. Some $30 million will go toward modernizing roads and bridges in the Central Valley to promote public transportation. The loan will also help fund a proposed electric train in the Central Valley.

President Oscar Arias, who has called public works projects a priority for his administration, urged lawmakers to approve the loan quickly.

The loan is “good news,” but it’s no magic bullet, said Claudio Donato, an expert in concessions law.

“Projects have stalled not just because of a lack of resources,” he said, “but also because the state lacks the capacity to design, build and oversee them.”

The government must now carefully plan its investment, hire capable people to choose and supervise construction firms and navigate red tape.

In a National Development Plan unveiled in January 2007, Arias wrote, “This country’s infrastructure has fallen woefully behind and is incompatible with Costa Ricans’ aspirations for development and well-being.”

But more than halfway into Arias’ presidency, roads and bridges remain in shoddy shape.

In a report last year, the Japanese International Cooperation Agency (JICA) stated, “most of the 1,330 bridges on national highways suffer from severe deteriorations” (TT, Aug. 10, 2007). A study released in December by the University of Costa Rica found that country’s roads are overloaded and poorly maintained.

New highways, ports and airports are crucial for Costa Rica’s development, said Donato. ggillers@ticotimes.net

 

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