WASHINGTON, D.C./Guatemala City, January 18, 2006
—
The International Finance Corporation and the World Bank announced today a subnational financing operation that will support the construction of the TransMetro mass transport system in Guatemala City.
This operation was arranged through the Municipal Fund, a joint IFC-World Bank initiative. It consists of an IFC local currency partial credit enhancement to Banco G&T Continental, through a risk-sharing facility, of up to the equivalent of $6.7 million. This amount represents 14.4% of a syndicated loan, which will mobilize 351 million Guatemalan quetzals (equivalent to $46.2 million) for the Municipality of Guatemala City to finance the project.
The municipality will invest the proceeds to finance part of the first phase of the TransMetro mass transport system project and other infrastructure-related
projects.
The Municipal Fund’s financing will help improve the public transportation system in Guatemala City through the development of a more efficient route structure, as well as replacement of the existing bus fleet with high-capacity diesel buses in dedicated lanes. These improvements will benefit 180,000 expected daily users. Many of them are in the poorest segments of the population and depend on public transportation because they live far from their place of employment.
Jane Armitage, the World Bank’s Director for Central America, said, “This first investment in Central America by the Municipal Fund demonstrates the commitment of the World Bank Group to broadening the sources of commercial financing for local governments without relying on sovereign guarantees.”
Atul Mehta, IFC’s Director for Latin America and the Caribbean, noted, “This innovative project demonstrates the need for structured support to subnational clients in the region – support that IFC is uniquely positioned to provide.”
The Honorable Mr. Alvaro Arzú, Mayor of Guatemala City, said, “We welcome the World Bank Group’s support to this project, since it will provide much-needed transportation infrastructure for the people of our city.”
About the Municipal Fund
The Municipal Fund is a combined initiative of the World Bank and the International Finance Corporation, whose innovative financial offerings provide subnational clients – states, municipalities, and municipally-controlled institutions – with direct financing and access to capital markets, without relying on sovereign guarantees. For more information, visit http://www.ifc.org/municipalfund.
About IFC
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
IFC press releases are available on line at
http://www.ifc.org/pressroom
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