Contacts:
In Washington: Stevan Jackson (202) 458 5054
sjackson@worldbank.org; In Guatemala City: Carmen Gadala (502) 2366 2044, Ext 278 Cgadala@worldbank.org WASHINGTON, March 30, 2006 – The World Bank’s Board of Directors approved late in the day yesterday a $30 million loan to increase the incomes of the rural population while decreasing inequality in rural communities, especially indigenous groups. The main objectives of the Rural Economic Development Specific Investment Loan are: i) to improve the competitiveness of the rural areas, especially within the indigenous community, and ii) to strengthen the institutional capacity of public agencies participating in the program. The new project supports the Government’s program which aims to bring together public institutions and to provide access to markets and finance multi-sector investments, including support for the private sector. “A number of recent studies and reports – including World Bank reports on CAFTA, rural infrastructure, on information, communications and technology (ICT), on drivers of growth and on decentralization – informed Guatemala’s national rural development strategy,” said Jane Armitage, World Bank Director for Central America. “We hope this new program will help the Government in its mission by providing critically needed support to rural communities, to facilitate their increased participation in the national economy.” The development of a national rural development strategy as well as on the implementation of rural programs has been high on Guatemala’s political agenda since the 1996 peace accords. The Government is developing a comprehensive strategy supported by financing from the World Bank and Inter-American Development Bank, among other donors, to make a serious impact on poverty in rural communities. “Despite a significant increase in basic infrastructure in some areas, rural infrastructure quality remains low and large segments of people living in rural communities remain without access to basic services,” said Neeta Sirur, World Bank Country Manager for Guatemala. “We hope this program will also improve coordination of infrastructure planning, ultimately extending access to important services.” The Government’s program and new World Bank financed project will work in tandem; focusing first on rural territories which have the conditions to generate short-term economic growth linked to poverty reduction. The new program also supports the government’s development plan “Vamos Guatemala”, which seeks to promote social solidarity, reduce poverty and inequality and promote economic integration; accelerate growth to above the 4 percent observed in the 1990s and ensure the environmental and social sustainability of economic development. The loan also supports the Bank’s Country Assistance Strategy (CAS) for Guatemala, approved in May 2005, which explicitly includes Bank assistance to support rural development. “One of our key goals is to improve the environment for small and micro-enterprises in rural areas,” said Pierre Werbrouck, World Bank Senior Agricultural Economist and task manager of the project. “The degree of overlap between high poverty rates and high poverty densities – in areas such as Western Altiplano – means that properly planned and coordinated investments there should reach a significant proportion of poor people in rural areas.” This $30 million Specific Investment Loan (SIL) has a reimbursement period of 17 years, including a five-year grace period. - | 
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