What if Development Projects Were Managed by the Private Sector?

Out of the $80 million awarded in Costa Rica to the Limón Port City Project 5 years ago, only 12% of it has been spent, mainly on paying the salaries of public officials connected to the project.

Tuesday, June 17, 2014

Editorial

A few months ago a controversy arose in Spain over the allocation of funds for development, such as low-interest financing for development projects by a private construction company. Keeping in mind the poor results in the Limon Port City Project in Costa Rica, it might not be such a bad idea to give these kind of soft loans to private enterprise, who stand to to lose (or gain) if the project fails, and not the public officials who supposedly do a better job because they are not motivated by profit, but don't have the incentive to carry out their work either, because whether they do so or not, they will still get their wages paid at the end of the month. The economic impact of the implementation of the projects would be achieved just the same, and most importantly, the projects would definitely be finished.

In June 2009 the World Bank agreed to lend $72 million to restore an area of ​​the Costa Rican Caribbean having one of the lowest rates of productive and social development and, concomitantly, the largest rates of poverty and unemployment. Added to the WB loan was a contribution by the Government Costa Rica of $8 million making a total of $80 million available for 17 subprojects to address the port modernization and renovation of the railway, the revitalization of cultural heritage, the construction of basic sanitation and drainage, local economic development and strengthening of municipal institutions.

In December 2012 we published "Inability to execute projects: Of $80 million in funds for the development of port city project in Limon, Costa Rica, in three years, only 3.3% has been executed."

Now, two years later, the time allowed for the execution of the project has run out and the WB has canceled it, even denying an explicit request by the new Costa Rican government, for the period to be extended.



More on this topic

Costa Rica: Half of Limon Port City Project to Continue

June 2014

The World Bank has agreed to maintain funding for some of the works that make up the project to modernize the infrastructure of the port and the city for $72 million.

After having rejected the request to extend the loan for $72 million made by the administration of Luis Guillermo Solís, the World Bank has agreed to review the conditions of the loan and maintain funding only for certain works of the project, which will be defined by the entity depending on what state of advance they are in.

Costa Rica: New Setback for Limón Port City Project

June 2014

The World Bank has rejected a request made by the government for an extension to continue the project to modernize infrastructure in the port city project in Limon.

The International Bank for Reconstruction and Development (IBRD) at the World Bank decided to reject the extension request submitted in January 2014 by the Chinchilla administration to extend beyond May 31, 2014, the deadline for executing the works, a situation that the current government is trying to reverse.

Government Seeks $40 million for Port of Moin

October 2012

The Costa Rican government is seeking funds for the modernization of the port terminal in Limón.

The Executive has submitted to the Legislative Assembly a request to sign a loan for modernization works at the terminal.

According to the projections by the Ministry of Finance, investment for next year would be around $8 million, $24 million in 2014 and the remaining $8 million would be disbursed in 2015.

$80 Million Approved for Ciudad Puerto Limón

June 2009

The contract for the $80 million loan for the "Ciudad Puerto Limón" project, which represents a significant investment designated for infrastructure projects, was ratified.

The funds will be invested over a period of five years and they will be designated for projects such as sewer and restoration work, among others, in order to promote tourism in the city.

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