In Washington: Gabriela Aguilar (202) 473-6768
In Mexico City: Fernanda Zavaleta
WASHINGTON, DC, April 9, 2009—The World Bank approved today a loan to the Mexican Government for US$1.5 billion dollars to expand Oportunidades, the national conditional cash transfer program which helps 5 million of the most vulnerable families in the country to cope with poverty conditions.
This new financial support is aimed at contributing with the Mexican program in improving the conditions of health, education and nutrition for the most underprivileged families. To that end, money transfers will be granted to families in exchange of periodic medical check-ups and attendance to workshops on health related issues, and regular school attendance for children and teens.
These programs, in which the State and the underprivileged households share the responsibility for overcoming poverty, can reduce poverty in the short and medium term, because they improve the human capital, particularly when supported by improved public services.
The program began in Mexico as part of an extensive effort to make social safety nets more efficient and thus replace subsidies which were not targeted to help the neediest groups. The Oportunidades program succeeded in lowering the drop out rates in schools among students in sixth and seventh grade by nine percentage points and increased the use of preventive health services. As the program targets mothers and young people, it has the capacity to provide essential services in health and education, thereby providing a social safety net which is vital to help the people most affected by the effects of the global financial crisis.
“This loan represents an integral part of a scaled up assistance program to Mexico which is expected to reach about US$4 billion in 2009. This operation seeks to support the government in its efforts to relieve the social impact that the country is facing as a consequence of the economic slowdown,” said Axel van Trotsenburg, World Bank Director for Mexico and Colombia.
According to van Trotsenburg, “the main purpose behind social safety net programs in times of crisis is to protect income and avoid irreversible losses in physical assets and human capital. Our efforts are directed towards promoting gradual economic recovery: whether it is through strengthening the financial sector, supporting investments in infrastructure or programs that seek to alleviate the effects of climate change,” he added.
The project has two components:
· Support to the continuation and the expansion of the Oportunidades program by financing bimonthly cash transfers to beneficiary families that comply with the established conditions.
· Technical assistance in order to conduct studies aimed at improving the connection between Oportunidades and other socially oriented government programs. It will also support the implementation of the Indigenous People’s Plan which will establish the course of action necessary to define an alternative model for administrating and operating the Oportunidades program in indigenous areas.
“The World Bank’s support is significant because of both the resources it provides and for the technical assistance and the global experience it has acquired. This will allow us to continue to assist the 25 million people that live in the five million most vulnerable households throughout the country, and will help them continue to increase their human capital in face of the current complications in the labor market,” said Salvador Escobedo, National Coordinator of the Oportunidades program.
Some of the expected results are:
· Increase in the number of families that received regular medical check-ups.
· Increase in the number of children that are able to progress from elementary to secondary school and from secondary school to high school.
· Increase in the proportion of Oportunidades schools in the Quality School Programs-PEC.
· Increase the proportion of scholarships for higher education for young people in the Oportunidades program.
The expanded program is based on rigorous external evaluations which have measured tangible results in education and health outcomes among children participating in the Oportunidades program. Results show that in rural areas, the probability of entering secondary school rose by 33 percent, and enrollment rates in tertiary schools nearly doubled. In urban areas, the dropout rate among students 16–19 years old fell by 20 percent, while enrollment rates increased for children 6 to 18 years old. Meanwhile, families also increased their health visits by up to 35 percent nationwide. Anemia in children under two fell by 12.8 percentage points, and rural children from 0–5 had 20 percent fewer sick days.
The efforts for technical assistance will be centered on: improving the program’s effectiveness in indigenous communities; linking the Bank’s participation on other projects in order to connect the Oportunidades program with other initiatives.
The Country Partnership Strategy signed with Mexico in April 2008 establishes a relationship with the government based on financing and knowledge sharing in a flexible framework that allows it to cater to Mexico’s development challenges and needs.
The project will be implemented over a 24-month period. It is a fixed-spread loan with a 16-year grace period. The total amount will be paid at the end of the term, together with an end fee of 0.25 percent of the total amount.
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