TOURISM INFRASTRUCTURE

LOAN FUNDS ARE SUB-LENT FOR AIRPORT, ROAD, AND UTILITY PROJECTS AT 11 SITES IN 5 COUNTRIES: GUATEMALA, EL SALVADOR, HONDURAS, NICARAGUA, AND COSTA RICA. INSPECTION REPORT IS BASED ON REVIEW OF PROJECT DOCUMENTS, DISCUSSIONS WITH AID OFFICIALS IN WASHINGTON AND AT THE REGIONAL OFFICE FOR CENTRAL AMERICAN PROGRAMS (ROCAP) IN GUATEMALA CITY, CABEI OFFICIALS AT THEIR HONDURAN HEADQUATERS AND COSTA RICAN OFFICE, AND WITH VARIOUS PROJECT CONSULTANTS. THE TOURISM INFRASTRUCTURE LOAN WAS MADE PREMATURELY IN THAT ADEQUATE TECHNICAL AND FINANCIAL FEASIBILITY STUDIES HAD NOT BEEN MADE. MORE THAN 2 YEARS AFTER THE LOAN WAS SIGNED, NO USAID INFRASTRUCTURE FACILITIES HAD BEEN STARTED AND THE AMOUNT OF THE LOAN WILL NOT BE SUFFICIENT TO COVER THE COSTS OF THE INFRASTRUCTURE THE LOAN WAS INTENDED TO FINANCE. THE ORIGINAL ESTIMATE OF $18.6 MILLION FOR THE COST OF THE INFRASTRUCTURE FACILITIES HAS RISEN TO $32.7 MILLION. SOME OF THE DESIGNATED SITES ARE NOT SUITED FOR THE INTENDED CONSTRUCTION NOR WILL SOME OF THE FACILITIES FOR WHICH FUNDING WAS PROVIDED BE NEEDED. FURTHERMORE, THERE IS NO ASSURANCE THAT THE SUBSTANTIAL PUBLIC AND PRIVATE INVESTMENT FUNDS NEEDED TO UTILIZE THE INFRASTRUCTURE FACILITIES FUNDED BY THE USAID LOAN WILL BE AVAILABLE. FOR EXAMPLE, IN EL SALVADOR, A BEACH RESORT WAS PLANNED FOR ICACAL. THIS HAS BEEN FOUND TO BE THE LEAST DESIRABLE LOCATION FOR THAT PURPOSE IN THE COUNTRY, IN PART BECAUSE IT WAS THE FARTHEST FROM THE COUNTRY"S PRINCIPAL TOURIST ATTRACTIONS. A MORE DESIREABLE LOCATION FOR A BEACH RESORT EXISTS CLOSE ENOUGH TO THE CAPITAL CITY THAT THE EXISTING AIRPORT COULD BE USED TO ACCOMODATE TOURISTS. THE PROJECT CO-MANAGER AT ROCAP STATED THAT THE NATIONAL SCHOOLS FOR TRAINING LOWER LEVEL HOTEL EMPLOYEES, WHICH ARE CONTEMPLATED UNDER THE LOAN, ARE UNNECESSARY SINCE HOTELS GENERALLY TRAIN THEIR OWN PERSONNEL. THERE IS ALSO CONSIDERABLE DOUBT REGARDING THE NEED FOR THE PLANNED REGIONAL HOTEL EXECUTIVE TRAINING SCHOOL.