The Inter-American Development Bank (IDB) has approved a $700 million Conditional Credit Line for Investment Projects for Peru, along with a first individual loan of $350 million under this line, which will finance a program to provide water, sanitation, and storm drainage services for the city of Juliaca, in the Puno region.
The operations were approved by the IDB's Board of Executive Directors. The Conditional Credit Line for Investment Projects aims to boost the quality of life of beneficiaries in Juliaca by improving the management and quality of basic services, and making those services more accessible. Meanwhile, the first individual loan under this credit line will enhance living conditions for the residents of Juliaca by improving the accessibility, quality and management of drinking water and sewerage services, adopting an approach that takes climate change into account.
The project will directly benefit 300,000 people, or approximately 100,000 households, with new or improved drinking water and sewerage connections. It will therefore cover the entire population of Juliaca, closing access gaps. In addition, the company SEDAJuliaca will benefit from strengthening initiatives and actions to boost its efficiency, which will also indirectly benefit the entire population of the city.
According to the Peruvian Institute of Economics, Puno is the poorest region in Peru, with a poverty rate almost 20 points above the national average. Juliaca is the most populous city in the Department of Puno and is the hub for much of the region's commercial activity. Despite this, the city's drinking water and sewerage coverage rates are 67.2% and 70.4%, respectively, which are lower than the averages for the Puno region and Peru as a whole.
To address these challenges, the project will fund drinking water supply and sewerage works to increase coverage and improve service quality. It will also finance improvements in water and sewerage service management and in SEDAJuliaca's capacities.
The facility’s first individual loan of $350 million has a 15-year repayment term, a 7-year grace period, an interest rate based on the Secured Overnight Financing Rate (SOFR), and an additional $75 million local contribution.
