Contacts: In Washington: Stevan Jackson (202) 458 5054 sjackson@worldbank.org; In Guatemala City: Virginia Barrios 502-2366-9852, Ext 263 vbarrios@worldbank.org WASHINGTON, August 2, 2007 – 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. The new loan is the last in a series of three loans identified in the World Bank’s Country Assistance Strategy for Guatemala and has a strengthened component which supports financial sector development. “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. “We hope that this new program will assist the government in continuingto improve the investment climate, ultimately strengthening the economy as a whole and to improve many of the social indicators and support financial sector development.” Specifically, the Third 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 2008 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 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. This $100 million Development Policy Loan has a reimbursement period of 20 years, including two year grace period. - | 
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