The Inter-American Development Bank (IDB) approved a $100 million loan to enhance rural road connectivity and quality in El Salvador. By upgrading its unpaved roads, the Central American country will boost productivity, competitiveness, and access to public services.

The higher quality and more extensive rural road infrastructure will benefit vulnerable populations, who are often excluded because they live in remote and hard-to-access locations. The improvements are expected to directly benefit 40,000 inhabitants and improve their quality of life. They will also indirectly benefit an estimated 900,000 citizens who regularly use these roads. Additionally, the upgraded infrastructure will provide cheaper and faster access to new labor markets, increase people’s incomes, and give them more options to escape poverty.

El Salvador is the smallest and most densely populated country in Central America, and 38% of its 6.3 million inhabitants live in rural areas. The economic mainstays of these areas are agriculture, commerce and hospitality, manufacturing, and construction.

Improving the rural road network is key to connecting the different areas of the country, catalyzing its economic activities, promoting tourism, reinforcing agribusiness logistics chains, and providing access to jobs and services.

Farmers use these roads to move their harvests to silos or processing centers. The roads also link to main highways, which in turn facilitate access to land borders, airports, and ports where producers can export to the United States and Central America.

The loan aligns with the country’s strategy of transforming production and institutions in rural areas. By improving unpaved roads, it aims to ensure food security, the profitability of the coffee industry, and tourism’s place as a main pillar of the economy.

The IDB financing will be disbursed over a period of five years, with a 25-year repayment term, a five-and-a-half year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).