IDB Approves $250M Loan to Clean Motagua River and Improve Guatemalan Lives

The Inter-American Development Bank (IDB) has approved a $250 million loan to support Guatemala in tackling pollution and restoring the Motagua River Basin, the country’s largest watershed. The initiative aims to improve environmental conditions while boosting public health, economic opportunities, and cross-border cooperation with Honduras.

A Major Investment in Sanitation and Waste Management

The IDB-financed program will focus on expanding solid-waste collection and disposal systems, improving the treatment of effluents and wastewater discharges, and strengthening Guatemala’s national capacity for water quality monitoring and control.

Local governments will also receive support to enhance sanitation services and manage solid waste more effectively. According to the Bank, the program will directly benefit:

• 166,000 households with improved sanitation services, and

• 225,000 households with access to proper solid-waste management.

The project is expected to reduce pollution in the watershed, promote a circular economy for waste management, and create new formal jobs for recyclers, with particular focus on increasing employment opportunities for women.

Challenges in the Motagua River Basin

The Motagua River Basin spans 96 municipalities across 14 departments, home to nearly four million people. It is vital for agriculture, biodiversity, and livelihoods, yet faces multiple environmental challenges:

• Solid and liquid waste pollution

• Deforestation and recurring forest fires

• Decreased water flows and erosion

These problems are not confined to Guatemala. The Motagua carries waste downstream into Honduras, polluting Caribbean coastal areas and underscoring the need for a coordinated binational approach.

Long-Term Funding Needs

Despite this major investment, authorities note that addressing the basin’s challenges requires significant additional resources:

• At least $420 million is needed for comprehensive solid waste management.

• An additional $2.14 billion will be required to achieve safe sanitation for the population by 2035.

The newly approved loan is the first in a series of interventions planned for the Motagua Basin. Upcoming projects will include:

• Sanitation systems in the northern sub-basin of the Las Vacas River, which runs through the Guatemala City Metropolitan Area.

• Integrated solid waste management centers.

• Municipal composting units to reduce organic waste.

Strengthening Institutions and Governance

Beyond infrastructure, the program will also support institutional strengthening to ensure sustainable results. The IDB will provide resources to modernize the Ministry of Environment and Natural Resources and the Municipal Development Institute, building capacity for long-term management of water resources, sanitation, and waste.

Loan Terms and Structure

The approved operation has a 22.5-year repayment period, including an eight-year grace period, with an interest rate tied to the Secured Overnight Financing Rate (SOFR).

Toward Cleaner Rivers and Healthier Communities

The loan reflects Guatemala’s and the IDB’s commitment to tackling one of Central America’s most pressing environmental challenges. By improving waste management, water treatment, and institutional capacity, the program not only aims to restore the ecological health of the Motagua River but also to safeguard the well-being of millions of people.

With future phases planned and binational cooperation on the horizon, the initiative could serve as a regional model for integrated watershed management and sustainable development.