The city will use the resources to expand coverage of sanitary and storm drainage, increase wastewater treatment coverage and improve the management of drainage and sanitation systems, the multilateral said in a press release.
The project includes the construction and rehabilitation of sewer and storm drainage, a new disposal system that will replace raw sewage discharging in the city bay, and the relocation of families affected by the sanitation works.
Once work is complete, all wastewater currently entering the bay will receive proper treatment and sanitation coverage will increase to 90% of the city's population.
The program will also enhance the environmental quality of the bay of Montevideo and city beaches located west of the city, as well as protecting the quality of restored beaches in the eastern side.
IDB's 25-year loan has a four-year grace period and Libor-based variable interest rate. Uruguay's government will provide US$7.55mn in counterpart funding.
The work falls under phase IV of Montevideo's environmental sanitation program, which has received previous funding from IDB.