internal rate of return. The project's financing is separate from the governmental budget. The state, which has a lower credit rating than the ACP, does not guarantee or endorse any loans borrowed by the ACP for the project. Assuming that tolls increase at an annual average rate of 3.5 percent for 20 years, and according to the traffic demand forecast and construction schedule deemed most likely by the ACP, the external financing required will be temporary and in the order of US$2.3 billion to cover peak construction activities between 2009 and 2011. The ACP's revenue projections are based on questionable assumptions about increased canal usage and shippers' willingness to pay higher tolls instead of seeking competing routes. In a bid to attract new business as well as keeping the current customers, the ACP is looking to implement financial incentives in their toll programme, including a loyalty scheme, which are expected to combat the problems raised by increased fees. With the cash flow generated by the expanded canal, investment costs are expected to be recovered in less than 10 years, and financing could be repaid in approximately eight. The $2.3 billion financing package for the canal expansion, signed in December 2008 in the midst of the global financial crisis, includes loans from the following government-owned financial institutions: Japan Bank for International Cooperation (JBIC)—US$800 million European Investment Bank (EIB)—US$500 million Inter-American Development Bank (IDB)—US$400 million Corporación Andina de Fomento (CAF)—US$300 million International Finance Corporation (IFC)—US$300 million The financing is not tied; that is, contracts can be awarded to firms from any country. The loans are for 20 years, including a 10-year grace period. Under a common terms agreement, all five financial institutions agreed to provide the same loan conditions to the ACP. Shortly before, credit rating agency Moody's gave the ACP an A1 investment grade rating. Mizuho Corporate Bank and the law firm Shearman & Sterling helped put the financing package together. Environmental impact The ACP's proposal claims that the project will not permanently harm the environment, communities, primary forests, national parks or forest reserves, relevant patrimonial or archaeological sites, agricultural or industrial production areas, or tourist or port areas. It says that any harm can be mitigated using existing procedures and technology. The proposal says that the project will not permanently reduce water or air quality. The proposed water supply program maximizes the water capacity of Gatun and Alhajuela Lakes and