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.
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