Type
Case Studies
Author
Dr. Gunter Zietlow
Organization
Senior Road Executive Course, University of Birmingham
Published in
2004
Submitted by
Olim Latipov
Related theme(s)
Finances & Economics
Region
Latin America and Caribbean (LAC)
Country
International

Road Funds in Latin America

The extensive road networks of Latin America and the Caribbean, valued at over 350 billion US$, show alarming signs of neglect and decay. More than 30 billion US $ are being wasted annually due to the absence of adequate road maintenance. Individual countries in the region are losing between 1% and 3% of their annual GNP due to an unnecessary increase in vehicle operating costs and loss of road asset value alone.


The prevailing financial and institution system of road maintenance has been clearly identified to be at the root of the problem. In most of these countries an adequate flow of funds cannot be secured by the general budgeting financing procedure. In addition, the rules and regulations of the public administrative system do not allow for an effective and efficient management of road maintenance. As it is unlikely that under the prevailing system substantial and sustainable improvements can be made a new approach is necessary to eradicate this problem.


As a consequence, several of the countries in Latin America and the Caribbean have started to put road maintenance on a fee-for-service basis and to transfer road maintenance management from a “government ministry environment” to a “company environment”, which seems to be better suited in the long-run to keep roads in good condition. As a result, a new generation of road maintenance funds has been created in El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua and four states of Brazil, Mato Grosso, Mato Grosso do Sul, Paraná, and Goiás. The article discusses the principles for creating sustainable road maintenance funds in general, as well as the approach taken by each of the different countries involved.

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