WASHINGTON, May 5, 2009: The World Bank’s Executive Board of Directors announced Tuesday a New Strategic Partnership with Paraguay with 500 million US dollar in assistance for 2009-2013. These funds intend to reduce poverty, foster economic growth and improve governance. The Board also approved a 100 million US dollar Public Sector Policy Development Loan to minimize the impact of the global economic crisis while improving fiscal performance.
Paraguay faces critical challenges in terms of social inclusion and governance. Poverty, traditionally endemic in rural areas, now is also present in urban settings. Overall poverty rates in Paraguay are high compared to other Latin American countries. The country has the fourth highest income inequality rate, while land concentration tops the list worldwide. Furthermore, multiple public opinion surveys have found that most Paraguayans do not trust the government, and consider it corrupt.
– We want to support and strengthen the role of both the government and civil society in transforming Paraguay into a more democratic, equal and prosperous society, said Pedro Alba, World Bank director for Paraguay, Argentina, Chile and Uruguay. – To this end, we are increasing our project portfolio and strengthening our local presence so as to better respond to the country’s requirements,” he added.
To reach these goals the World Bank / Paraguay Strategic Partnership has the following objectives:
Support poverty reduction and promote social equity through human development and social infrastructure projects and provide technical support to improve land redistribution;
Support the modernization of the state and develop a counter-cyclical fiscal policy to offset the impact of the global financial crisis;
Promote better governance by supporting initiatives to improve government accountability, transparency and integrity.
Mitigate the Impact of the Global Economic Crisis
The First Public Sector Development Policy Loan intends to fight the effects of the global financial crisis in Paraguay and improve fiscal performance in four key areas:
Improved tax system;
Efficient financial monitoring of the public sector, particularly in state-owned enterprises;
Quality management of public expenditure; and
Human resource policy.
The fixed-rate First Public Sector Development Policy Loan of 100 million US dollar by the International Bank for Reconstruction and Development (IBRD), the World Bank´s branch for middle-income countries, is payable in 27 years, including an eight-year grace period.
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