Mexico Country Assistance Strategy (CAS)

See below for the main points on the current World Bank Country Assistance Strategy in partnership with Mexico, 2006-2012. The full documents are available on the top right side of this page.

More general information about  Country Assistance Strategies

Washington, April 8, 2008 -- The World Bank Board of Directors endorsed today the new Country Partnership Strategy (CPS) for Mexico.    It captures the change in the dynamic of the Bank’s relationship with Mexico of the last few years, with the need to provide increasingly flexible, on-demand advisory services and technical assistance. At the same time, the new strategy emphasizes the key role of the World Bank as a provider of long-term finance at very competitive interest rates.

The new CPS covers the period of the Administration of President Felipe Calderon. Annual base lending by IBRD (the World Bank Group’s lending facility for middle income countries) to the federal government would be US $800 million over the next three years.    At that time, a mid-term review would determine the future lending amounts. 

“Mexico has made great strides in economic and social development over the last two decades” said Axel van Trotsenburg, World Bank Director for Mexico and Colombia. However, he added “the benefits of this progress have not been shared equally. This represents a key development challenge”.     

“Other challenges of global character such as climate change and Mexico’s international competitiveness will require a menu of advisory services and financial products driven primarily by Mexican demands” van Trotsenburg, explained.

The new partnership is based on a streamlined IBRD lending program, and an expanded program of analytic and advisory activities. Most lending would be consolidated into an annual Development Policy Loan (DPL) that supports the government’s own national development strategy.  The program of advisory services will be carefully tailored to country demands and would respond rapidly to emerging opportunities.

The rationale for moving to a streamlined approach is based on particular characteristics of Mexico:

(a) The country has an established track record of sound macroeconomic management;

(b) Long term development challenges remain in order to generate sustainable and equitable growth;

(c) There is a continued demand for World Bank Group engagement in a broad  policy dialogue and specific, focused advisory services;

(d) Competitive access to finance and superior debt management is available.

As part of the new partnership strategy, the private sector arm of the WBG the International Finance Corporation (IFC), will continue to:

·  Support the need for increasing   access to finance to underserved segments of the population and

·  Support the development of the housing finance market. 

Other priority areas for investment and advisory activities include improving the quality of health, education, and physical infrastructure and promoting reforms that continue strengthening the investment climate.

First IBRD Climate Change policy lending operation for US$ 501.25

As a clear example of the new strategic partnership approach, the World Bank Board of Executive Directors also approved today a loan in the amount of US$ 501.25 million to support the Government’s efforts under its National Climate Change Strategy to mainstream climate change considerations in public policy.

“Mexico has emerged as a global leader in the climate change arena. This is the first operation of its kind for the World Bank. It is in recognition of the Mexican efforts and commitment in reducing CO2 emissions. It is also an important first step for the World Bank in finding concrete ways to be a long-term partner of Mexico in supporting a low carbon development path in the country”, explained van Trotsenburg“.

The Climate Change Development Policy Loan will be implemented by the Ministry of Environment and Natural Resources. The loan is designed to decrease the adverse environmental impacts of climate change by reducing greenhouse gas emissions and concentrations on a voluntary basis in key sectors. The operation will also provide a strategic framework for an expanded dialogue between the Government of Mexico and the Bank on climate change.

According to Benoit Bosquet, World Bank Senior Natural Resources Management Specialist “The partnership between Mexico and the World Bank on climate change goes back many years. The Bank already supports about 25 operations for climate change mitigation and adaptation in Mexico. The DPL further raises the political profile of climate change and reinforces the policy dialogue on climate change between the Government of Mexico and the Bank”.

The Ministry of Finance (SHCP) has designated Nacional Financiera S.N.C. (NAFIN) as financial agent of the Borrower with regard to the loan.

The Climate Change DPL will be a single tranche loan. It is a Fixed- Spread Loan (FSL), US dollar denominated, payable in 10 years, including 10 years grace period with bullet repayments, at a variable interest rate. The Government has requested the Bank to use the Deferred Draw-Down Option (DDO) for disbursement of this loan, which will give the authorities the flexibility of drawing down the loan proceeds only if needed, provided that overall program implementation remains on track.