Contacts:
In Washington: Stevan Jackson (202) 458 5054
sjackson@worldbank.org; In Guatemala City: Carmen Gadala (502) 2366 2044, Ext 278 Cgadala@worldbank.org
WASHINGTON, August 29, 2006 – The World Bank’s Board of Directors today approved a $100 million quick-disbursing budgetary support loan which recognizes Guatemala’s efforts to promote higher, more inclusive growth through improvements in the business climate, strengthened trade integration and more secure property rights in urban and rural areas. Other measures supported include increased social spending and improvements in public financial management and procurement. The loan is the second in a series of three loans identified in the World Bank’s Country Assistance Strategy for Guatemala. “With a multi-ethnic population of about 13 million and a gross national per-capita income of about $2,350, Guatemala is the largest economy in Central America; however, poverty and inequality are high and social indicators are low relative to the country’s average income.” said Jane Armitage, World Bank Director for Central America. “Strengthening the environment for economic growth, trade and investment, particularly in basic social and infrastructure services, are key to ensuring sustainable poverty reduction.” Specifically, the Second Development Policy Loan will help in: · Meeting fiscal and financing needs. This loan helps meet the Government’s objective of providing financing on more favorable terms and diversifying financing sources for its 2007 budget. · Improving the outlook for economic growth.The loan supports a broad agenda of measures anchored around Guatemala’s efforts to deepen its trade and regional integration agenda, including its participation in DR-CAFTA. The agenda includes key actions of the complementary agenda of policy and institutional reforms to ensure that Guatemala can fully benefit from the opportunities of trade and greater integration into the world economy.
· Increasing Social Spending. The loan supports increased allocation of budgetary resources for key social spending needs identified in the Peace Accords, including education, health and access to justice.
· Increasing the efficiency and transparency of public sector management.The loan supports public sector modernization efforts aimed at improving the efficiency of public expenditures, strengthening governance and fighting corruption with a specific focus on government procurement and financial management. Efforts in these areas are also expected to foster an environment more conducive to investment and growth. The loan supports the government’s development plan “Vamos Guatemala”, which seeks to promote social solidarity, reduce poverty and inequality and promote economic integration; accelerate growth to above the 4 percent observed in the 1990s and ensure the environmental and social sustainability of economic development. “The Berger Administration has placed high priority on reigniting inclusive growth as a key pillar of its “Vamos Guatemala!” plan to achieve the economic and, especially, poverty reduction and social goals, identified in the 1996 Peace Accords,” said Neeta Sirur, World Bank Country Manager in Guatemala. “The Guatemalan economy is showing strong signs of recovery in the two or so years since implementation of the development plan began, so the Bank is delighted to be able to support the plan with this new financing.” “The structure of Guatemala’s economy has shifted substantially since the 1980s, moving from a principally agriculture (coffee-dominated) base, to a much more diversified economy, with increased emphasis on commerce, tourism and financial services,” said David Gould, World Bank Lead Economist for Central America and Co-Task Manager of the loan. “We hope that this new program will assist the government in continuingto improve the investment climate, ultimately strengthening the economy as a whole.” This $100 million Development Policy Loan has a reimbursement period of 20 years, including two year grace period. -###- For more information on the Guatemala Development Policy Loan, please visit the project web site.
For more information on the World Bank’s work in Guatemala, please visit: http://www.worldbank.org/gt |
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