Guatemala Secures $350M IDB Loan to Expand Key Highway and Boost Regional Trade

In a landmark decision aimed at advancing regional integration and economic development, the Inter-American Development Bank (IDB) has approved a $350 million loan to finance the expansion of Guatemala's Northern Highway CA-9, particularly the 47.5-kilometer stretch between Teculután and Mayuelas. This strategic section of road plays a vital role in facilitating international trade and enhancing connectivity between the Atlantic and Pacific coasts of Central America.

The financing operation, greenlit by the IDB Board of Executive Directors, falls under the broader framework of the "América en el Centro" initiative. This regional plan promotes resilient, inclusive, and sustainable infrastructure projects that enhance trade, mobility, and climate resilience across Latin America and the Caribbean.

Economic and Social Impact for Zacapa and Beyond

The expansion project is expected to directly benefit more than 86,600 residents and over 2,050 businesses across Teculután, Río Hondo, and Gualán municipalities in the department of Zacapa. Additionally, the daily 19,000 commuters and freight operators using this critical route will experience significant improvements in travel time, safety, and service levels.

Northern Highway CA-9 is the backbone of Guatemala’s trade and transportation infrastructure. It links the country’s major ports—Santo Tomás de Castilla and Puerto Barrios on the Atlantic—with San José and Quetzal on the Pacific coast. The highway also intersects with Guatemala City, the national hub for industry, logistics, and commerce, making it a strategic artery for economic activity.

However, the current infrastructure along the Teculután-Mayuelas section has long been plagued by design limitations, congestion, and high vulnerability to climate-related events such as floods. These factors have hampered economic efficiency, road safety, and reliable access to urban centers for both individuals and commercial transport.

Key Upgrades and Climate-Resilient Infrastructure

To address these issues, the IDB-financed program will expand the highway from two lanes to four, incorporating state-of-the-art, climate-resilient engineering standards to ensure uninterrupted accessibility. The scope of work includes:

• Construction and rehabilitation of bypasses, intersections, and structures

• New bridges and culverts to improve flood resistance

• Enhanced road safety features and universal accessibility measures

• Active mobility infrastructure such as sidewalks and bike lanes

By integrating nature-based solutions, the project will also fortify Guatemala's efforts in climate adaptation. In high-risk flood-prone zones, these eco-engineering solutions include forest conservation, water-sensitive road design, and sustainable drainage systems. Training programs will empower 4,475 local families to adopt agroforestry, silvopasture, and regenerative land management practices across the watersheds the highway traverses.

Investment in Future Connectivity

Beyond immediate construction works, the program also allocates funds for pre-investment and engineering studies for other segments of the Northern Highway CA-9—particularly those that connect with Puerto Barrios and remain in need of modernization. This planning phase is expected to facilitate the eventual expansion of the entire northern corridor, reinforcing Guatemala’s integration into the Central American and global trade ecosystem.

Loan Terms and Economic Outlook

The $350 million IDB loan comes with favorable terms, including a 23-year repayment period, a 7.5-year grace period, and an interest rate pegged to the Secured Overnight Financing Rate (SOFR). These conditions provide Guatemala with both fiscal flexibility and the capacity to invest in long-term infrastructure development without placing undue stress on public finances.

Strategic Vision for Regional Development

The Teculután-Mayuelas expansion represents more than just a transportation upgrade—it’s a strategic leap toward economic modernization, trade competitiveness, and inclusive development. By addressing both logistical bottlenecks and environmental vulnerabilities, the project aligns with regional goals to build resilient and sustainable economies in the face of climate change and global supply chain challenges.

With this initiative, Guatemala reaffirms its commitment to building infrastructure that connects people, markets, and ecosystems, while ensuring that progress does not come at the cost of environmental or social sustainability.