Assistance programs geared to countries’ middle-income status.
A chance ‘to listen and learn.'
Mexican aid package integrates climate change in development.
May 6, 2008—Mexico City and Bogota, Colombia, are about 3,000 km apart, but they share some things in common.
They’ve both experienced sustained economic growth over the past few years and begun to tackle the big gaps between rich and poor while laying out ambitious plans for the future.
Both will be visited by Robert B. Zoellick this week during his first trip to Latin America as World Bank President.
And both are also about to embark on new multi-year development plans supported by World Bank financing packages that go beyond traditional lending operations. Mexico’s and Colombia’s Country Partnership Strategies, as these plans are known, were approved last month by the Bank’s Board of Directors. Mexico is expected to borrow US$800 million a year for the next three years, and Colombia US$1 billion a year for the next four years.
More Flexible Services and Competitive Loan Rates Mexico and Colombia are among the first to take advantage of new World Bank services for middle income countries that involve more flexible, on-demand services, as well as more analytical work and technical assistance, long-term loans with highly competitive interest rates and maturities, and “frontier” products to manage risk..
“Mexico is a leading economy in the region with a global presence that will continue to expand, while Colombia has done remarkable progress in the last few years,” said Zoellick. “These middle income countries are working very hard to achieve a more inclusive and sustainable development, and the World Bank supports their efforts through a diversified menu of programs, innovative financing, and knowledge sharing adapted to the specific circumstances of each country.”
Chance to ‘Listen and Learn’ During his two-day visit to Mexico (May 6 and 7), Zoellick will meet with President Felipe Calderón, members of Calderón’s Cabinet, the Chamber of Deputies, and the Senate, as well as representatives from the private sector and students. He meets with Colombian President Alvaro Uribe and members of his Cabinet on May 8.
Zoellick described the trip as a chance to “listen and learn from them about how we might be a better partner.”
For Colombia, the challenges include securing the peace, integrating former soldiers into society, and addressing extreme poverty and deep inequities.
The country is still recovering from its worst economic crisis in 70 years, but has rebounded from near stagnation in 2002 to achieve a growth rate of 6.6 percent in 2007. Colombia has made important gains in growth, security, and economic stability. Those achievements have reduced poverty and improved quality of life, notes the Partnership Strategy.
For Mexico, the challenge is how to increase the rate of growth in an inclusive way and to pursue policies that will allow nearly 45 million Mexicans to escape poverty.
Mexico has the highest per capita income in Latin America. It has dramatically reduced debt and improved its credit rating since the financial crisis of the 1990s and is now financially stable. But Mexico is also a country of “two worlds,” with a “skewed” distribution of income, notes the Country Partnership Strategy. While urban elites attend private schools and study abroad, some 75 percent of the labor force only has a basic level of education or less.
To help tackle this problem, the Partnership Strategy focuses on accelerating growth, improving competitiveness, promoting social inclusion and reducing poverty, developing infrastructure and assuring energy security, strengthening institutions, and assuring environmental sustainability.
Mexico: Partner in Climate Change Fight Mexico has become a leader among developing countries in addressing climate change adaptation and mitigation and the World Bank has worked closely with Mexico to support its environmental agenda. During his visit, Zoellick and President Calderón signed a recently approved climate change loan for US$501.25 which will support the implementation of the new National Climate Change Strategy which committed the country to placing climate change at the heart of its national development policy.
Currently, the economic cost of environmental damage is estimated at 9% of GDP; nearly 90 percent of this cost is due to air pollution. Mexico also has serious water issues in heavily populated areas, but has made “important strides” toward managing water for sustainably, says the Partnership Strategy.
“Mexico has been one of the leaders in the developing world in having a national strategy to try to look towards low-carbon growth,” Zoellick said. “They’re one of six countries around the world that have helped design that strategy—and this deals with everything from alternative energy sources to transportation systems.”
Innovative Solution Mexico has also had a leadership role in the design of development solutions, such as the Oportunidades conditional cash transfer program, which rewards families for keeping children healthy and in school. The program has been a model for 30 countries, as well as New York City, and could be one way to help poor people around the world who have been hard hit by high food prices, Zoellick said.
“It has been a strong success, and it is a way that you can try to target support to those most in need as opposed to trying to do things such as such as control prices, which would send the wrong signals to producers and really don’t target the help.”
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