IDB Approves US$21.8mn for Lempa Basin

The Inter-American Development Bank (IDB) has approved three separate loans totaling US$21.8mn for El Salvador, Guatemala and Honduras to support sustainable development of the Upper Lempa river basin, the IDB announced. El Salvador will receive US$14mn from IDB ordinary capital and Guatemala US$4.5mn also from ordinary capital, while Honduras will receive US$3.3mn from the IDB's Fund for Special Operations. In parallel financing, the Nordic Development Fund is providing a US$3mn concessional loan to Honduras, while Germany's technical cooperation agency GTZ is providing grants of $750,000 to El Salvador and $500,000 to Guatemala. The Norwegian Fund provided a US$450,000 grant for project preparation, Japan's Special Fund is providing a US$700,000 grant for technical cooperation, and the Spanish Trust Fund is supporting the program with a US$150,000 grant. The Upper Lempa river basin, with a population of 305,000 and an area of 3,600 sq. km., is the largest of the shared watersheds in the tri-national border area, known as the Trifinio Region. The IDB financing will support investments in the management and protection of natural resources, local infrastructure and basic waterworks, while an early warning and monitoring system will be established to help prevent or mitigate natural disasters, in particular landslides and floods. The 25-year loans to El Salvador and Guatemala have a 5-year grace period, at a variable annual interest rate, while the 40-year Honduran loan has a 10-year grace period, at an annual interest rate of 1% during the grace period and 2% thereafter. The Lempa River is heavily contaminated with heavy metals, pesticides and fecal chloroforms, according to a two-year study released last year by the Salvadoran Foundation for Social Economic Development (Fusades).