Colombia: World Bank Approves $200 Million to Support Labor Reforms and Social Development

Contacts: 
In Washington: Alejandra Viveros (202) 473-4306
Aviveros@worldbank.org
In Mexico City: Gabriela Aguilar (5255) 5480-4200
Gaguilar2@worldbank.org

WASHINGTON, July 25, 2006 — The World Bank’s Board of Directors today approved a $200 million loan to continue the work of reforming Colombia’s labor regulations and to make further progress with social development projects.

The Third Labor Reform and Social Development Policy Loan is focused on strengthening Colombia's social protection system and improving the delivery of social services. In addition, it seeks to raise human capital formation, improve employability, and enhance monitoring and evaluation systems for better transparency, social oversight, and results management in the social sectors.

Specifically, the loan will support the Government of Colombia’s objectives by:

• Establishing an effective authority in charge of developing a comprehensive social risk management system to provide efficient and timely protection of the poor and vulnerable against the threats and consequences of illness, unemployment, poverty and economic volatility.
• Providing greater access of poor children to the Colombian Institute for Family Well-being (ICBF) Assistance and Prevention programs through the establishment of an explicit targeting policy, increasing coverage for ICBF nutrition programs to 400,000 children, and implementation of practices to ensure the cost effectiveness of ICBF early childhood programs.
• Advancing the implementation of health system reform by restructuring 100 hospitals, further expanding health insurance coverage of the poor to 13.7 million people, reducing direct subsidy to public hospitals, and ensuring quality of services of health insurers and care providers.
• Implementing labor and training reforms to reduce the wedge between employers’ hiring/training cost and workers’ acceptable wage, while improving the social protection of workers.
• Accelerating education reforms to provide access to good quality education for 9.2 million students in basic and secondary school.
• Providing greater transparency and social control of social programs through their periodic evaluation and greater participatory oversight by citizens.

“This loan will solidify and build on the gains forged during the first and second Programmatic Labor Reform and Social Structural Adjustment Loans, which assisted the Government of Colombia in implementing its labor and social reform agenda over the period 2002-2004,” said Wendy Cunningham, World Bank task manager for the project.  

This new $200 million, fixed-spread loan is repayable in 13 years, including nine years of
grace.