WASHINGTON, June 9, 2005 — The World Bank’s Board of Executive Directors today discussed the new Country Assistance Strategy (CAS) for Uruguay, which projects financial assistance of up to US$800 million between 2005 and 2010, as well as technical and advisory services. In addition, the Board of Directors approved a Social Program Development Policy Loan and two investment projects for transport infrastructure and natural resources management. “Now that the economy is rebounding from the crisis, the Government’s priorities have shifted from crisis response to the achievement of longer-term equitable and sustainable economic development,” said Axel van Trotsenburg, World Bank Country Director for Argentina, Chile, Paraguay and Uruguay. “The new strategy, accompanied by these three projects, represents a strong beginning to a renewed partnership with Uruguay in supporting critical public policies and investments.” The new Bank’s program of lending and advisory services supports the new administration’s development plan “Government of Change –Responsible Transition (El Gobierno de Cambio – La Transición Responsable)”. To achieve equitable and sustainable economic development, the Government faces three broad development challenges: reducing vulnerability, sustaining growth, and improving living standards. The new CAS is the result of close collaboration with the Government and has benefited from wide consultations with government and non-governmental representatives including youth groups, private sector, international agencies and academia. During the Board discussion, Executive Directors appreciated the wide ranging reforms undertaken so far, but stressed the need to further pursue structural reforms to ensure longer-term equitable and sustainable development. Directors welcomed the smooth political transition following the October 2004 elections. They noted the Government’s commitment to maintain macroeconomic stability and pursue sustainable economic and social development, including increased efforts to help the poor. Several Directors emphasized the importance of private sector participation and the potential for IFC and MIGA to contribute in these areas. In addition to discussing the CAS, the Board approved three new operations for a total of US$175 million to support social programs, and investments in transport and natural resources. Social Program Development Policy Loan The US$75.38 million Social Program Development Policy Loan (SPDPL) supports the Government’s policy actions to increase the efficiency, coverage and sustainability of Uruguay’s health, education and social protection programs. The policy measures supported by this loan are expected to contribute to a reduction in poverty and improved equity and efficiency of social sector expenditures, while setting the stage for further Bank involvement in the social sectors. The US$75.38 million, fixed-spread loan is repayable in 15 years, including five years of grace. “We are supporting the new government’s policies in education, health and social protection in order to increase access and efficiency of social services within a framework of fiscal sustainability. Uruguay’s social programs were successful in maintaining core social indicators like infant mortality and school attendance despite the economic shock of the crisis,” said van Trotsenburg. Transport Infrastructure Maintenance and Rural Access Project The US$70 million Transport Infrastructure Maintenance and Rural Access Project seeks to upgrade the country’s transport infrastructure to facilitate cost-efficient and safe transport of freight and passengers. The project focuses on rehabilitating key transport links, removing existing bottlenecks, arresting any further deterioration of infrastructure due to budgetary constraints, and improving infrastructure management and safety. The US$70 million, fixed-spread loan is repayable in 15 years, including five years of grace. Natural Resources and Biodiversity Management Project The Natural Resources and Biodiversity Management Project will be financed with a US$30 million loan from the World Bank and a US$7 million grant from the Global Environment Facility (GEF). It is an innovative project that blends both rural development and environmental conservation. “This project gives new opportunities to Uruguay’s rural population,” added van Trotsenburg. “It will enable them to improve their competitiveness and their market opportunities, demonstrating how to achieve economic development in harmony with the conservation of the natural environment, upon which their long-term future depends.” The project will directly benefit 13,000 rural families in the adoption of economically and environmentally sustainable integrated production systems which focus on the management and conservation of soils, water and rangelands; as well as the mainstreaming of biodiversity conservation. The US$30 million, fixed-spread loan is repayable in 15 years, including five years of grace.
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