Reimbursable Cooperation

The Development Promotion Fund (FONPRODE) is the Spanish Cooperation instrument through which financial cooperation is channelled to partner countries. Among other modalities, it provides sovereign-guaranteed loans to States with concessional financial conditions to finance projects aimed at promoting the countries’ development in accordance with the principles, values and guidelines of the Spanish Cooperation.

In the water and sanitation sector, FONPRODE complements the FCAS portfolio by financing new projects or second phases of Water Fund programmes.

Currently, the Water Fund and FONPRODE have been making progress working together to identify reimbursable cooperation programmes in the water and sanitation sector that could be jointly financed by the Inter-American Development Bank (IDB) and FONPRODE, following the same guidelines set by the Spanish Cooperation. In this context, the following operations should be highlighted as a result of the new collaboration framework:

Operations

Paraguay
The reimbursable cooperation operation in the Republic of Paraguay to co-finance, together with the IDB, the Drinking Water and Sanitation Project for Small Cities and Rural and Indigenous Communities, where FONPRODE provides a credit of up to $20 million out of a total of $60 million. The operation is planned as a continuation of the FCAS programme PRY-011-M, and the focus of funds is on rural areas. In 2020, it is under implementation.

Drinking Water and Sanitation Project for the Metropolitan Area of Asunción, Lambaré Basin, combining funding from the FCAS, other international donors and an EU grant under the blending modality. FONPRODE is providing a loan of up to $60m, the IDB $105m and the EU, a grant of €10m. The Paraguayan Congress is expected to approve the FONPRODE credit and the IDB loan in the second half of 2021. The programme is in the design phase and will be developed in the coming years.
Panama
The operation to provide credit to the Republic of Panama to co-finance the Sanitation Programme for the districts of Arraiján and La Chorrera, together with a loan from the Inter-American Development Bank (IDB), the CAF, the CABEI and the EIB. In principle, FONPRODE is providing a loan of up to $50m, which would exclusively finance the wastewater treatment plant foreseen under the project, the IDB $25m (a loan of $150m was initially foreseen, but the scope of the project has been reduced), and the other entities are contributing $200m. Although the FONPRODE Credit Agreement was signed in 2018, no disbursements have yet been made because the Panamanian government has opted to reformulate the project, postponing the implementation of the works.
Ecuador
The operation to provide credit to the Metropolitan Public Company of Drinking Water and Sanitation of Quito to co-finance the Drinking Water and Sewerage Project in Quito (Ecuador), together with a loan from the Inter-American Development Bank (IDB). FONPRODE is providing up to $40m through a $217.1m programme loan, with the IDB contributing $87m and the local contribution $90.1m.

The operation to provide credit to the Decentralised Autonomous Municipal Government of the Canton Portoviejo (GADMCP) to co-finance the Drinking Water and Sewerage Programme of the Portoviejo Canton, together with a loan from the Inter-American Development Bank (IDB), the European Investment Bank (EIB), and the local contribution of the Decentralised Autonomous Government of the Canton Portoviejo. FONPRODE is providing up to $17 million through a $122 million programme loan, with the IDB contributing $27.5 million, the European Investment Bank $59.8 million and the local contribution of $17.6 million. To ensure coverage in rural areas, the programme will be complemented by a contribution of €10m from the European Commission’s Latin America Investment Facility (LAIF) and a grant of €2.3m from the Cooperation Fund for Water and Sanitation.
Bolivia
Finally, the operation to provide credit to Bolivia for the co-financing of the Integrated Water Management Programme in Urban Areas, together with the IDB loan. Following the approval of a €3m Water Fund intervention and an EU grant of €14.5m, a combined operation is being prepared in which FONPRODE would provide $30m and the IDB would contribute $100m in credit. The project is awaiting the results of the October 2020 elections which will determine the new leaders. It is hoped that the elected mayors will provide momentum and prioritise the project in order to move forward in the negotiation of the credit agreement, which was paralysed by the political crisis that the country has suffered in recent years.