World Bank Approves $10 Million for Irrigation in Peru

WASHINGTON, June 14, 2005 – The World Bank today approved a $10.26 million loan to increase the production and productivity of irrigated agriculture in Peru’s coastal area.

“This project supports the Government’s goal of improving farmers’ well-being and contributing to poverty alleviation,” said Marcelo Giugale, World Bank Director for Bolivia, Ecuador, Peru and Venezuela. “By supporting institutional reforms and public investment programs in the irrigation sector, the project will have a direct impact on the productive lives of the poor –as more than 70 percent of potential beneficiaries are small farmers.”

The Supplemental Loan for the Peru Irrigation Subsector Project will promote the development of the Water Users Organizations’ financial and management capacity, improvements in the use of water resources, and increases in soil use efficiency. The supplemental financing will support and complement the original Irrigation Subsector Project, approved in 1997, and will help formalize water rights. 

Specifically, the project will support the following activities:

·         Rehabilitate and improve public irrigation systems through the design, implementation and supervision of civil works in 46 coastal Water Users Organizations.

·         Establish an incentive program for irrigation technology improvement by financing the technification of irrigation for groups of farmers with at least six members and an area of at least 24 ha.

·         Support institutional strengthening and capacity building by helping Water Users Organizations and Irrigation Committees to achieve self-sufficiency in technical, financial, and administrative aspects.

·         Support water resources management by financing the formalization of 190,000 individual water rights to ensure that beneficiaries have legal security on the use of irrigation, and promoting private investments in irrigation.

“This new loan will benefit some 160,000 farmer families by completing and consolidating the original irrigation project,” said Abel Mejia, World Bank task manager for the project.  

Since June 1997, the World Bank has been financing the original Irrigation Subsector Project with a loan of $85 million. The project was closed on June 2004, but some of its original funding had to be relocated for emergency rehabilitation of primary irrigation infrastructure damaged by El Niño in 1998.

The new $10.26 million fixed-spread loan from the International Bank for Reconstruction and Development (IBRD) is repayable in 14 years, including eight years of grace.