| Jun. 29th, 2005 @ 06:59 pm in response to an email i sent to him asking about PPP info |
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Dear Miss :
Plan Puebla Panama is an regional integration effort that's being carried out by eight countries (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama). It can be described as a combination of two similar regional development plans launched almost at the same time by Mexico (for its southern and southeastern states, which are less developed than the northern and central states) and by the Central American countries, which had developed their own portfolio of regional programs. At the request of the eight countries, the Inter-American Development Bank, the United Nations Economic Commission on Latin America and the Caribbean and the United Nations Development Program analyzed the Mexican and Central American plans to find areas of convergence. Based on that analysis, the eight countries decided to pool their efforts under a single plan, which they called Plan Puebla Panama. The programs they would back would be regional, as opposed to national or local.
One of the programs they chose is the integration of a network of highways covering some 9,000 kilometers and connecting all of their countries. The principal "corridor" runs from the city of Puebla in central Mexico down to Panama City (hence the plan's name). This corridor, as is the case of most of the other highways on the PPP network, is based on roads that already exist, such as the PanAmerican Highway. The IDB and other multilateral agencies such as the Central American Bank for Economic Integration and the Andean Development Corporation are financing some of the PPP road projects.
Why did they choose to work together on highways? An evaluation of the Central American roads had found that nearly 70 percent were in poor conditions. This imposed a greater cost to any activity that involved overland transportation, to the point that trucking charges in that region were twice as expensive as in Europe. On top of this, there were all kinds of barriers to trade among these countries themselves due to their respective customs systems.
So, for example, a dairy trying to send milk from Costa Rica to El Salvador would take several days to cover a distance that in the United States can be covered in a few hours. As a consequence of these and other factors, trade among the Central American countries was relative low compared to their trade with their North American neghbors. In the late 1990s, only about 20 percent of their exports were between countries in their region. In recent years that proportion has climbed as high as 28 percent of their total exports. In comparison, around 57 percent of the total exports of the NAFTA countries (Canada, Mexico and the United States) are between those three partners. Before NAFTA came into effect in 1994, that percentage was about 47 percent.
Some critics of the PPP argue that the IDB and Latin American governments do not properly consult people in the areas where infrastructure projects are to be done or evaluate the potential environmental and social impacts of the projects. If you'd like to see how the IDB finances roads included in the PPP network, Nicaragua is a good example. Please see the press release at http://www.iadb.org/NEWS/Display/PRView.cfm?PR_Num=16_04&Language=English on a $40 million loan that is financing work on a network of roads in one of Nicaragua's four priority regions. On the right-hand column there are links to the loan document, which describes the outreach and consultation campaigns conducted during the design of the project as well as the environmental and social impact evaluations. There are also links to the websites of the Nicaraguan Transport and Infrastructure Ministry and the Nordic Development Fund, which is also providing a loan for this project.
Other critics complain that we're financing highways and ignoring rural roads, which are direly needed by people in the countryside, where poverty is largely concentrated. But in fact we do finance rural roads projects. In some cases in comprehensive programs, as in Nicaragua; in other cases as stand-alone projects, such as the $55,4 million loan approved for El Salvador this week http://www.iadb.org/NEWS/Display/PRView.cfm?PR_Num=127_05&Language=English.
You might also read that the IDB is financing PPP highways in Mexico, when in fact we're haven't made a single loan to Mexico for any PPP project.
Finally, some critics prefer to focus exclusively on infrastructure projects, as if that were the only sector in which the IDB is interested. As a matter of fact, more than half our lending goes to social programs such as education and health subsidies for poor families, which provide them an incentive to keep their children longer in school, feed them more varied diets and take them to get their shots. For instance, our two biggest loans to Mexico have been for the Oportunidades anti-poverty program, totalling $2,2 billion. http://www.iadb.org/idbamerica/index.cfm?thisid=3037&lanid=1. This is far more than we have lent for PPP projects in all eight countries involved in the plan.
Sorry for the digression but, as you point out, there is all sorts of versions swirling around the Internet. Hopefully you will find this useful. Best regards,
Peter Bate
IDB Press Office
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