MEF okays US$25mn IDB loan for sanitation reform program

Monday, December 26, 2011

Peru's economy and finance ministry (MEF) has approved a US$25mn loan from IDB for phase II of a sanitation reform program.

The program, developed by MEF and the housing, construction and sanitation ministry (MVCS), aims to improve the efficiency, sustainability, and environmental conditions of water and sanitation service in the country, according to an IDB project document.

Phase II will support policy reforms in the sector in order to optimize the equitable use of investment resources and improve service provider governance, transparency, reporting and corporate decision-making to promote long-term sustainability of services, the development bank says.

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Work also aims to strengthen the operational capacities of the governing and regulatory authorities to promote proper execution of government programs; complement the regulatory framework for small cities and rural areas; and improve the quality and transparency of the tariff system to enhance service efficiency and sustainability.

In addition, phase II will look to promote the participation of specialized operators to improve water utilities' management, according to an IDB release.

The 20-year loan comes with a five-year grace period and a Libor-based interest rate, state news agency Andina reported.