Peru: World Bank Approves $150 Million For Social Programs

Washington, November 11, 2003 – The World Bank today approved a $150 million loan to Peru to strengthen an array of education, health and community assistance programs aimed at the country’s poor majority. Specific goals of the  Programmatic Social Reform III loan include expanding access to these vital services.

"The Peruvian government has made decentralized, pro-poor projects a top priority, and the World Bank is committed to helping maintain that focus,” said Marcelo Giugale, the World Bank’s Director for Peru, Ecuador, Bolivia and Venezuela. “The strategy is already showing results.”

Since the first Programmatic Social Reform loan in 2001, Peru has begun to make a dent in poverty and joblessness; indexes for each have fallen by 1% over the past two years. An  estimated 55% of the population lived in poverty in 2001, and unemployment in the formal sector was 10% in 2000.

World Bank financing is critical to enabling the government to increase support for “priority social programs,” which emphasize providing textbooks, medicines and other critically needed items, rather than paying salaries and administrative costs. These programs represent 1.2% of GDP this year, up from 0.6% in 1999.

Current objectives include improving the targeting of the Seguro Integral de Salud (Comprehensive Health Insurance) program, which guarantees free access to a package of health services designed mainly for mothers and children in the country’s poorest departments. The efficiency of food-aid programs, meanwhile, has been steadily increasing in areas of greatest need. In addition, the government plans to improve transparency in these programs to the point that beneficiaries help design projects and carry them out.

“The Programmatic Social Reform loans were originally designed as a three-part package,” said Daniel Cotlear, the World Bank task manager for the project. “But the newly approved loan is now expected to be followed by a fourth, aimed at supporting social programs newly decentralized to regional and municipal governments.”

The Programmatic Social Reform III loan is a fixed spread, single currency loan with 14 years to maturity, including an eight-year grace period.