Brazil's São Paulo state to improve highway network with IDB loan

By Richard High04 December 2008

Brazil's São Paulo state is to carry out a program of highway expansion and rehabilitation thanks to a US$194 million loan from the Inter-American Development Bank (IDB).

The loan will rehabilitate critical freight and passenger transportation corridors in Brazil's industrial and agricultural hub as about 2500 km of state roads are re-paved, drainage inmproved and embankments stabilised.

The project mainly focuses on the state's local road system (secondary/municipal roads), where traffic and safety conditions are in most need of improvement. The goal, according to the IDB, is to provide sustainable transit conditions for the movement of persons and goods, at lower operating costs and with greater levels of safety.

The project also includes an institutional strengthening component to enhance the management of municipal road maintenance.

Since 2001, the IDB has supported São Paulo in the implementation of two highway rehabilitation programs intended to enhance the state's competitiveness and production capacity. The present program is a continuation of the programs and activities pursued in Phases I and II.

The State of São Paulo is Brazil's manufacturing hub, accounting for about 33% of Brazil's GDP. Its road network carries freight valued at US$ 190 billion, of which 20% is destined for export.

The state is home to 25% of the country's livestock herd, is the world's third-largest producer of orange juice, and accounts for a third of Brazil's fruit production.

São Paulo is also the main producer of sugarcane and its ethanol derivative, with annual output of close to 11 million m³. Continued improvements in transportation infrastructure are considered an essential condition for the forecast expansion of this industry.

The program will be carried out by the São Paulo State Highways Department. The IDB loan from the Bank's ordinary capital is for a 25-year term, with a 5 year grace period, at an interest rate based on LIBOR.

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