World Bank Approves $500 Million To Support Argentina’s Transition Program

WASHINGTON, May 22, 2003 ― The World Bank today approved a $500 million loan to support Argentina’s efforts to restore economic growth and development, while protecting social programs that mitigate the adverse effects of the crisis on the country’s poor.  The Economic and Social Transition Structural Adjustment Loan is part of a concerted effort by multilateral institutions to support Argentina during its transition period and lay the groundwork for a more comprehensive program to be developed and implemented by the new administration.

“We expect that this transition program will help consolidate the current economic recovery and set the basis for a longer-term program by the new government,” said Axel van Trotsenburg, World Bank Country Director for Argentina, Chile, Paraguay and Uruguay.  “The proposed loan would strengthen Argentina’s ability to resume growth and to improve the implementation of social programs targeted to the poor. In this context, we very much look forward to working with the new administration.”

The Economic and Social Transition Structural Adjustment Loan will support the Government’s plan to retire federal and provincial quasi-monies, worth the equivalent of about 7.8 billion Argentine pesos, as well as the continued deficit reduction efforts by the provinces.

“Eliminating quasi-monies will help to reestablish a normal payment system based on the peso and thereby strengthen the Central Bank’s ability to conduct monetary policy. It would also normalize federal-provincial fiscal relations, improve trade among the provinces and help low-income families and retirees who had to accept payments in quasi-monies,” added van Trotsenburg.

This loan also supports the Government’s priority social assistance programs such as Jefes de Hogar, school scholarships, conditional cash transfers and feeding programs, and includes the adoption of measures to improve their efficiency and coordination across the country.  Finally the loan provides support to Argentine efforts to ensure basic health services to the most vulnerable including immunizations, infant and maternal health, HIV-AIDS, and control and prevention of infectious diseases, as well as medicines for the poor.

The single currency U.S.-dollar, fixed-spread loan will be fully disbursed in one tranche of US$500 million.  The loan is repayable in 15 years, with three years of grace.

For more on the Bank’s work in Argentina, visit:  http://www.bancomundial.org.ar