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The transport ministry will receive a US$300mn loan and the line No.2 concessionaire will receive US$400mn from the IDB and US$50mn from an IDB-managed Chinese-Latin America fund, IDB said in a statement.
A consortium made up of Spain's ACS and FCC, Italian companies Impregilo and AnsaldoBreda and Peru's Cosapi, which was awarded the 35-year concession in March, will build 35km of tunnels and 35 underground stations by 2020.
The system will enable 660,000 passengers a day to cross the city in 45 minutes, reducing transport costs, pollution and traffic accidents, the IDB said.
"Besides being the largest project undertaken by a public-private partnership in the history of Peru, the expansion of the metro will raise Lima's public transportation to the level required by a modern metropolis," IDB vice-president Hans Schulz said in the statement.
The Lima metro, which has already awarded studies for a third line, is Latin America's largest infrastructure project, Peru's President Ollanta Humala said after a meeting in Lima with IDB president Luis Alberto Moreno.
Peru's government, which has also requested a US$150mn loan from Caracas-based lender CAF, plans to continue counter-cyclical public spending in infrastructure to counter an economic slowdown, Humala said.
"We're committing to investing more than US$13.5bn in 2014," Humala said at a ceremony at the presidential palace. "In the five-year period through 2016, projects will have totaled more than 84bn soles (US$28.5bn), more than triple the amount invested in the previous five-year period."
Humala, elected in 2011, steps down in July 2016 after elections due to be held in April of that year.