The IDB Group experience in the transport sector in Paraguay illustrates how a programmatic approach can bridge public and private efforts to deliver sustainable infrastructure and inclusive growth. Over the past 20 years, Paraguay has outpaced the growth rate of the rest of Latin America and the Caribbean, propelled by its rich natural resources and growing agricultural sector. However, getting soybeans, beef and other products to market is costly. Roads are the main way of getting around this landlocked country and only 13 percent of these vital arteries are paved. Tackling this challenge to unleash the country’s full potential requires action by both the public and private sectors.
The IDB and IDB Invest collaborated on a long-term plan to enhance the country’s road network. The IDB focused on building government capacity and implementing critical improvements to road infrastructure. Meanwhile, IDB Invest worked closely with the IDB to support the development of the country’s Public-Private Partnerships (PPP) Program, including deploying innovative financing structures to mobilize private investment for the country’s first private concession contract.
Through a multi-phased program from 2006-2023 (PR-L1007, PR-L1075), the IDB worked with the Government of Paraguay to integrate the country’s road networks into corridors to enhance agriculture exports, promote regional integration, and improve competitiveness. It focused on three main areas: completing the paving of primary transport corridors (Routes 8, 10, 13) in the eastern region of the country; increasing private sector participation in road expansion and management; and strengthening the institutional capacity of the Ministry of Public Works. Paraguay has leveraged these collaborative efforts to create a more cohesive national infrastructure strategy, ensuring long-term sustainability and resilience in its road networks.
Tangible benefits
Better road quality and connectivity have led to tangible economic and social benefits. Average transport costs for trucks were cut in half, a big gain for competitiveness considering that road transport in Paraguay accounts for approximately 26 percent of export costs. Operating costs for passenger vehicles also dropped significantly. For the improved segments of Route 13, they fell from $1.63/km in 2013 to just $.09/km in 2023. In addition, reduced travel times are helping increase people’s access to services and market opportunities. Trips that used to take over 3 hours on segments of Route 8 were down to 39 minutes by 2023. Moreover, roads that used to be impassable 70 days a year due to seasonal conditions such as flooding are now accessible year-round, and road accidents have dropped by 65 percent.
Agricultural productivity has also increased. The program aimed for at least a 35 percent increase in yields (tons/hectare) for the main export crops of soy, corn, and wheat in the departments with newly paved roads. This target was exceeded in most cases and corn yields in San Pedro and Caaguazú tripled from 2005-2019.
Mobilizing investment in infrastructure
In parallel, the IDB and IDB Invest have been working with the government for over a decade to develop its PPP program, aiming to increase private investment in sustainable and efficient infrastructure projects aligned with best international practices. This has involved strengthening the regulatory framework, including support for developing the country’s 2013 PPP Law, as well as capacity building for selecting, preparing, and tendering PPP projects, direct project structuring support, and financing for private concessionaires.
Financing PPP projects
IDB Invest is currently financing the country’s first PPP project, which doubled the lanes on 140km of road along Routes 2 and 7, the main economic arteries linking Asunción and Ciudad del Este. By serving as the anchor investor in this $530 million project, IDB Invest sent a strong signal to the market, encouraging other investors to participate. In 2019, to complement the project’s bond issuance, IDB Invest’s $200 million financing package included a guarantee to cover the initial construction risk and a long-term loan to be disbursed upon payment of the guarantee. This early de-risking instrument was vital in moving the project forward.
As construction progressed, in 2022 IDB Invest designed a new financial structure ― involving the issuance of its first project bond in the U.S. market― to cover the remaining project costs. This innovative capital market solution simplifies the original structure, offering the project sponsor and the market an efficient and scalable debt instrument that could be tradable in the future, in line with IDB Invest’s originate-to-share strategy.
Road construction on Routes 2 and 7 was completed in 2023, and drivers can now travel between Asunción and Ciudad del Este two hours faster than before. The roads are also safer, and in 2024 the concessionaire achieved international certification (ISO 39001) for its road management safety system. Building on this experience, the bidding process for Paraguay’s next PPP project for Route 1 is currently underway[1] The IDB Group has been working closely with the government since 2019 to prepare and structure this latest generation PPP, which will continue attracting private investment to strengthen Paraguay’s infrastructure and competitiveness
[1] As of May 2025.
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