IDB Approves $75M to Enhance Rural Roads and Development in Eastern Paraguay

In a move set to transform transportation infrastructure and stimulate rural development in Paraguay, the Inter-American Development Bank (IDB) has approved a $75 million multiple works loan. The funding will support a broad initiative aimed at improving agricultural competitiveness, social inclusion, and economic opportunities by enhancing rural road networks in the Eastern Region of the country.

This operation reflects IDB’s commitment to inclusive growth, aligning with Paraguay’s strategic goals of regional integration, rural accessibility, and infrastructure modernization. The program will address key deficiencies in rural transport corridors and improve resilience through sustainable construction and maintenance practices.

Program Objectives and Scope

The IDB-financed program will directly impact an estimated 170,000 people, many of whom reside in underserved rural communities where road quality and access to basic services are currently limited. The main objectives include:

• Expanding access to services and markets for vulnerable populations.

• Improving transportation safety and infrastructure resilience.

• Building institutional capacity within Paraguay’s transportation sector.

Approximately 30% of the target population lives in poverty, and improved road access is expected to unlock new economic and social opportunities in these areas.

Key Infrastructure Components

1. Road Improvements (123 Kilometers)

The project will rehabilitate 123 kilometers of rural roads, incorporating:

• Drainage systems

• Erosion and slope protection

• Pavement upgrades

• All-weather accessibility enhancements

This will ensure long-term durability and reduce the likelihood of service disruptions due to seasonal weather impacts.

2. Bridge Construction and Replacement

The program includes the construction of new bridges and replacement of those in critical condition. Notably, a 100-meter bridge will be built over the Monday River in Colonia Pengó San Miguel, located in Alto Paraná.

Other targeted road segments include:

• Carayaó–Nicolás Bo

• Cristo Rey–Carpacué

• Abaí–Tarumá–Tuna, in the departments of Caaguazú and Caazapá

These corridors are vital for connecting agricultural zones to larger markets and social service centers.

Enhancing Road Safety and Social Inclusion

Road safety is a priority of the program, with specific interventions designed to:

• Improve school zone safety along upgraded roads.

• Enhance student accessibility and reduce pedestrian risks.

• Encourage community involvement in road safety awareness and monitoring.

By integrating social considerations, the initiative aims to build infrastructure that serves all users, especially children and other vulnerable groups.

Capacity Building: A New Transport Master Plan

A major institutional output of the program is the development of a revised Transportation Infrastructure and Services Master Plan, which will:

• Strengthen planning and management capacity within the Ministry of Public Works and Communications.

• Provide a strategic framework for future infrastructure investment.

• Promote efficient and transparent use of public funds in the transport sector.

This component will contribute to Paraguay’s long-term infrastructure governance and aligns with IDB’s broader goals of enhancing state capacity and public service delivery.

Strategic Partnership: IDB and Paraguay’s Development Journey

The IDB has long played a strategic role in Paraguay’s infrastructure evolution, with a decade-long portfolio of rural road and highway improvement programs. This new operation is a continuation of that relationship, focused on regional equity and sustainable growth.

Paraguay's rural areas have historically faced logistical challenges that hinder productivity, especially in agriculture. With this loan, the IDB helps bridge the infrastructure divide, promoting integration of rural producers into national and international markets.

Loan Terms and Financial Structure

The loan has favorable financial conditions to ensure affordability and long-term impact:

• Repayment Term: 22.5 years

• Grace Period: 8 years

• Interest Rate: Based on the Secured Overnight Financing Rate (SOFR)

This financing structure provides flexibility for Paraguay to implement the program effectively while managing its fiscal commitments.

Paving the Way for Inclusive Rural Growth

By focusing on infrastructure resilience, accessibility, and institutional strengthening, the IDB’s $75 million investment in Paraguay sets the stage for significant socio-economic progress in the country’s Eastern Region. The initiative will reduce poverty, enhance mobility, and strengthen rural livelihoods—helping Paraguay unlock its full development potential through better roads and smarter transport policy.