| OVERVIEW Argentina is nearly 3,700 km long from north to south, and 1,400 km from east to west. It is bordered by Chile, Brazil, Bolivia, Paraguay and Uruguay. From Jujuy to Tierra del Fuego, the country presents marvelous contrasts: the northwest plateaus, forests in Chaco, the Pampas with its large plains, the lake region in the south, glaciers in Patagonia and forests in the northeast. Argentina is home to the highest peak in the Americas, Mont Aconcagua. Its snowcapped peak reaches 6,959 meters into rugged Andes skyline. Some 36 million people live in Argentina, almost half of whom in the city and province of Buenos Aires. The country has some 2.780.400 km² and the population, calculated on a national basis, is 13 inhabitants per square kilometer.
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ECONOMIC DEVELOPMENTS
Argentina’s macroeconomic performance in recent years was largely strong. Consecutive years of rapid and pro-poor economic growth enabled poverty and unemployment to be cut to levels experienced prior to the country’s 2001-2002 economic crisis. However, the economy started to decelerate in late 2008 due to domestic and international factors. The administration of President Cristina Fernández de Kirchner seeks to maintain economic growth and stability.
In recent years, Argentina’s growth has been strong and underpinned by twin surpluses (fiscal and external). In 2007, the economy grew by 8.7 percent, the fifth straight year of 8-9 percent growth since the financial crisis of 2001-2002. The recovery was supported by a strong domestic demand, including a dynamic expansion in investment spending since 2003, improved fiscal performance and favorable terms of trade (high commodity prices), particularly since 2006. The economy also benefited from a significant reduction in public debt following the 2005 sovereign debt restructuring. Twin surpluses (fiscal and external) allowed the country to accumulate foreign reserves and reduce the debt burden. The Government’s economic framework, aimed at supporting the growth momentum, rested on three main pillars: maintenance of a competitive exchange rate; fiscal prudence; and active income policies. This strategy was very successful. Poverty more than halved from 58 percent in 2003 to 23.4 percent in 2007, and unemployment fell from 21.5 percent in 2003 to 8.3 percent in 2007. Since 2008, growth was adversely affected by domestic and external factors. The four-month farm conflicto that erupted in March 2008 took a tollo n the economy, although growth kept its momentum until the second half of 2008 when the global economic crisis began to affect Argentina more strongly.
Response to Global Economic Crisis. Argentina has weathered the global economic crisis relatively well to date, but the sharp decline in commodity prices combined with the world economic slowdown and the strengthening of the peso relative to Argentina’s main trading partners is affecting the economic outlook through its impact on the fiscal and external accounts.The development of the global economic crisis in 2008 has reinforced the Government’s view favoring increasing regulation and further heightened the Government’s priorization of social safety nets and job creation.
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THE BANK ASSISTANCE PROGRAM
The Country Partnership Strategy (CPS) (2010-12) will continue to focus on the three pillars successfully supported under the previous strategy: (1) sustained growth with equity; (2) social inclusion; and (3) improved governance. However, there will be significant evolution in the support provided as this flexible but focused framework will allow rebalancing the portfolio toward even greater emphasis on the social inclusion pillar as the Bank’s key response to the deteriorating economic and social environment. The new strategy seeks to advance the Government’s development vision by providing pragmatic, performance-based support, consistent with an uncertain policy environment but adequate to the opportunities and reflecting the Bank’s positive experience in Argentina.
The proposed program includes the following objectives:
• Upgrade Argentina’s infrastructure to address potential bottlenecks to competitiveness, and underpin medium-term growth and poverty alleviation • Improve competitiveness, quality, and exports of agriculture and livestock production • Address a growing problem of resource degradation • Consolidate the reduction in poverty and expand efforts to reverse the longer-term poverty trend by increasing household incomes and integrating marginalized groups into the productive marketplace • Consolidate improvements in health indicators and improve quality of education while reducing drop out rates • Strengthen the effectiveness, efficiency, transparency and accountability of public sector management • Expand performance management and improve the quality of public expenditure and enhance service delivery outcomes and trust in institutions
The key features of the World Bank’s program in Argentina include the following projects: • PROSAP II – The Second Provincial Agricultural Development Project financed by a U$S 300 million loan from the WB provides support for new public infrastructure and services investments in rural areas, as well as for additional investments both within and outside private farms. Some 70 thousand small and medium producers will be the main beneficiaries of the project, this represents more than a third of the total of small and medium producers in regional economies. • Program to Promote Productive Innovation – the US$150 million supports the expansion of Argentina’s capacity to generate productive innovation in the knowledge industry, by means of the creation of highly skilled human capital and new knowledge-based enterprises fostering public and private cooperation in priority areas in communication and information technology, nanotechnology and biotechnology’ improvement research infrastructure and strengthening of the general regulatory structure.
•Plan Nacer – the project supports the introduction of performance based transfers in Argentina’s health system, with immediate attention to the health needs of poor mothers and children. The loan for US$300 million guarantees services to mothers and children in the northeast and northwest regions, where the country’s nine poorest provinces are located. • Provincial Road Infrastructure – the US$150 million loan supports road investment programs at the provincial level in Chubut, Corrientes, Córdoba, Entre Ríos, Neuquén and Santa Fe. The project will rehabilitate and maintain some 2,200 km of roads through CREMA contracts; rehabilitate and/or pave 270 km through traditional admeasurements type contracts and develop a comprehensive routine maintenance program over some 9,400 km to comply with critical road safety requirements. • Proinder - supports improving the productive and organizational capacity of poor rural communities and strengthening national and provincial rural development policy. The Bank supported Proinder with a US$75 million investment loan and granted an extension in 2007 of US$45 million to allow the program to expand and reach 72,000 households from the 30,000 originally contemplated. • Heads of Household Transition – the US$350 million project helps fund the implementation of a transition strategy to improve employment prospects and job placement for current participants in the Heads of Household program, as well as support efforts to strengthen the program’s management and governance. The Heads of Household is an emergency “safety-net” program created by the Government of Argentina in 2002 that provides income support to unemployed head of households. • Rural Education Improvement Project (PROMER) - the US$150 million loan supports the national government policy for rural education, a priority area in the government education policy that seeks to generate equal opportunities for all Argentines. PROMER supports the financing of appropriate training for rural teachers, the provision of materials and equipment for students and teachers, and the upgrading of physical facilities of rural schools. • Institutional Strengthening of ANSES – the US$ 25 million project seeks to enhance service delivery by the agency. This is being done through institutional reengineering, enhance fraud and error detection, change management, greater internal and external oversight, institutional strengthening of the Social Security Secretariat and civil society participation on the basis of innovative corporate management practices that add concrete value to ANSES’ beneficiaries. • Urban Flood Prevention and Drainage - supports flood protection works in Buenos Aires with the objective of reducing the city’s vulnerability to flooding through improvements to its drainage system. The loan is for US$130 million and contemplates the construction of two collection tunnels in the Maldonado Basin. • National Urban Solid Waste Management - supports the development of sustainable systems for urban solid waste management in Argentina. The loan for US$40 million seeks to improve public health and quality of life by developing environmentally and financially sustainable systems for urban solid waste management in the country. • Buenos Aires Infrastructure – the projects supports key investments in the road sector to enhance the Province’s productivity, high social priority projects in the water, sewerage and drainage sectors targeted towards areas of low income and high vulnerability. With the US$200 million loan, the provincial government will support works on roads, water, sewerage and drainage to help strengthen the productive potential of the economy and affect the living conditions of vulnerable and poor people. Analytical Agenda: The Bank is providing an extended plan of analytical work to Argentina including, among others, the following studies: A poverty assessment focused on the links between informality, poverty, and inequality. A social protection study to analyze policy options to support the transition from the Heads of Household program to a more permanent social safety net. An Institutional and Governance Review (IGR), to look at the experience of public sector reform at both the national and provincial level. A study on environmental management in Argentina using the Country Environmental Analysis approach to provide a better understanding of the economic impacts of degradation.
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For more information on World Bank assistance to Argentina, including lending breakdown and project reports, see: Proposed Projects
All Projects Or Visit Sistema de Ejecución de Planes de Adquisiciones - SEPA http://www.sepaargentina.org.ar s back to top
CONTACTS Yanina Budkin
Communications Officer
Tel: (54-11) 4316-9700
Fax: (54-11) 4313-1233
email: ybudkin@worldbank.org
Carolina Crerar
Public Information Associate
Tel: (54-11) 4316-9700
Fax: (54-11) 4313-1233
email: sip@worldbank.org |
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