A Loan Agreement was signed today in Tegucigalpa between the Republic of Honduras and Kuwait Fund for Arab Economic Development whereby the Fund will extend a loan of Kuwaiti Dinars five million (KD.5,000,000/-) (i.e. equivalent of 17  million US$) to help finance the Rehabilitation of Section II: Promdeca – Río Dulce of Tegucigalpa – Catacamas Road Project.  

The Signing ceremonies were attended by His Excellency Mr. Manuel Zelaya Rosales, President of the Republic of Honduras, who signed the Loan Agreement as an honorary witness. The Loan Agreement was signed on behalf of the Republic of Honduras by H.E. Ms. Rebeca Santos, Minister of Finance and on behalf of the Fund by Mr. Ghanem Sulaiman Al-Ghenaiman, Deputy Director General of the Kuwait Fund for Arab Economic Development.

The Project aims to support the economic and social development in the Central Eastern part of Honduras through an efficient and safe road suitable for all weather conditions. In addition, the Project will reduce vehicles operating cost, travel time and road maintenance cost.

The Project consists of the Rehabilitation of the existing paved road section between Promdeca and Río Dulce which forms part of the Tegucigalpa – Catacamas Road with a length of bout 50 km, consisting of two lanes 3.65m wide each with 2x1.35m paved shoulders. The works include site preparation, earth works, drainage structure, anti-erosion protection, pavement layers, road markings and safety works and consultancy services for the supervision of construction works. The Project is expected to be completed by mid 2010.

The total cost of the Project is estimated at about 359 million Lempira, the equivalent of about KD. 5.6 million, of which the foreign currency is equivalent to about KD. 4.87 million which represents about 87% of the total cost of the Project.  The Fund's Loan will cover about 89% of the costs of the Project.

The Loan will be for a period of 23 years including 3 years grace period, and will be amortized in 40 semi-annual installments, the first of which will be due on 1st date on which any interest or other charge on the Loan shall fall due after the elapse of the above mentioned grace period.

The Loan bears an interest rate at 2.5% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement.
 
By concluding this agreement, it will be the sixth Loan that the Fund provided to the Republic of Honduras, where the Fund previously provided five loans amounting to about 25.2 million Kuwaiti Dinars equivalent to about 85.7 million U.S. dollars for financing projects in various sectors. In addition to two Technical Assistance grants totaling about 597 thousands Kuwaiti Dinars (equivalent to about 2 million United States dollars) for financing the feasibility study of El Coyolar Dam and Irrigation Network Improvement Project and the Sula Vally Flood Protection Project.