Contacts: In Washington: Alejandra Viveros (202) 473-4306 Aviveros@worldbank.org In Quito: Paola Vallejo (593-2) 943-600 WASHINGTON, June 1, 2006 - The World Bank’s Board of Directors today approved a $60 million loan for Ecuador to strengthen the existing Human Development Bond cash transfer program, which seeks to protect poor families and foster investment in human capital. “This project will directly support the Government of Ecuador in the development of a comprehensive social protection strategy for the country,” said Marcelo Giugale, World Bank Director for Bolivia, Ecuador, Peru and Venezuela. “In addition, the project will contribute to poverty reduction by creating household-based incentives to fight malnutrition and attain universal primary and secondary education.” The Human Development Bond (BDH) is a conditional cash transfer program created in 2003 by merging two previously existing programs: the Solidarity Cash Transfer and the Schooling Grant. The BDH pays a monthly transfer to the 40 percent poorest households in the population provided they fulfill certain education and health co-responsibilities. The program is administered by the Ministry of Social Welfare, through the Social Protection Program. It has a budget of US$200 million, equivalent to 57 percent of all social assistance expenditure and 0.7 percent of GDP, which makes it the biggest conditional cash transfer program in Latin America in terms of budget share. The Support to Reform of the Human Development Bond Project seeks to reduce poverty and promote human capital investments among poor families by consolidating the role of the BDH as a conditional cash transfer program, and of the Beneficiary Selection Project (SelBen) as a targeting tool for social programs. SelBen is a proxy-means test that uses information on household demographic composition, assets, and other variables to classify households according to their welfare levels. The project will support the BDH program by financing two components: - The first component will provide institutional strengthening, support the consolidation of the BDH reforms, and help protect and provide opportunities for poor and vulnerable households in Ecuador.
- The second component will protect transfers targeted to the country’s 40 percent poorest households with children ages 0-16 to foster investments in health, nutrition, and education.
“The project will support actions aimed at strengthening the BDH program and ensuring that the technical, institutional, and legal conditions necessary to guarantee a successful consolidation of the BDH are in place,” said Carolina Sanchez-Paramo, World Bank task manager for the project. “It will also support the financing of Ecuador’s development priorities while increasing the impact and the quality of public spending,” added David Warren, World Bank co-task manager for the project. The $60 million fixed-spread loan is repayable in 18 years and includes a four-year grace period. - | 
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