Guatemala/WB: New 2013-2016 Partnership Promotes Socially Inclusive and Sustainable Growth

Kimberly Watson, Editor in Chief
September 27, 2012 /

The World Bank (WB) Board of Directors approved the new 2013-2016 Country Partnership Strategy with Guatemala which aims to promote social development as well as inclusive and sustainable growth in Guatemala. The WB program for Guatemala includes analytical studies and results-based technical and financial assistance.

The new Country Partnership Strategy (CPS) contemplates projects in public security, social protection and trade facilitation, among other areas. It also includes coordination and convening services to promote economic growth and financial assistance for development policies and investment projects totaling US$525 million.

Two keys issues for Guatemala —public security and gender equality— will cross-cut all World Bank activities in the country.

“The new Partnership with the World Bank supports three pillars of President Otto Perez Molina’s government program: the Fiscal Pact, The Peace Pact, Public Safety and Justice and the Zero Hunger Pact. The World Bank will contribute to the Government’s plan in order to improve Guatemala’s ’competitiveness, promote solid growth to create more opportunities and increase the efficacy of social programs,” said Pavel Centeno, Guatemala’s Finance Minister.

The CPS’ design is the result of close collaboration with the Inter-American Development Bank (IDB) intended to maximize the complementarity and impact of both institutions on Guatemala’s development. The World Bank and the IDB have already worked on the implementation of certain initiatives and, through the coordinated design of strategies in Guatemala, will work together on new projects and studies, in assessment missions and program monitoring.

The World Bank CPS is aligned with the priorities of the Guatemalan Government and was prepared after consulting representatives from civil society, the private sector and the international donor community.

“The World Bank is Guatemala’s partner in its process of change. Through technical assistance, financial support, global experience and innovative proposals, the World Bank is committed to aiding Guatemalan efforts to promote long-term growth and move toward a more equitable society with greater opportunities for all,” said Oscar Avalle, World Bank Representative in Guatemala.

The objectives of the 2013-2016 CPS include strengthening public policies on social development and promoting inclusive and sustainable economic growth. Each one of these strategic objectives includes specific areas focused on obtaining concrete results, including:

1) Strengthening public policies for social development.

· Support the creation of fiscal space and increase tax revenue to 12 percent of GDP in 2013. Moreover, support efforts to improve public financial management and consolidate the progress achieved in terms of public spending transparency.

· Support Government efforts to improve the results of social programs by helping with the implementation of the Zero Hunger program in 100 municipalities. Furthermore, improve the level of coordination and the implementation of Government social policies at national and municipal levels.

2) Promote inclusive and sustainable growth:

· Evaluate and improve infrastructure and logistics to facilitate international trade and improve Guatemala’s position in the 2016 Logistics Performance Index. This goal will also aid in the design of a master plan for tourism and the establishment of institutions to negotiate and implement effective public-private partnerships.

· Strengthen social urban infrastructure in poor areas, within the framework of the Safe Neighborhoods program and including assistance for the Social Development Ministry. The urban infrastructure improvement plan will start in the neighborhood of Limon in Guatemala City.

· Strengthen disaster risk management and Government efforts to address its main environmental challenges.

· Stimulate the growth of micro, small and medium enterprises and help improve the business climate in the country by simplifying the red tape needed to create a company and keep it functioning.

As part of the CPS, the International Finance Corporation (IFC) —the World Bank arm for the private sector— will continue to work with the World Bank and the Government to improve competitiveness and the business climate in Guatemala, as well as projects in the areas of agribusiness, energy, telecommunications, logistics, infrastructure, microfinance and financial services.

The World Bank Board of Directors also approved a US$200 million loan today to support Guatemala’s efforts to increase its fiscal space and expand opportunities for the most vulnerable. The loan will support Government activities aimed at increasing fiscal revenue to 12 percent of GDP in 2013, sign 12 international tax information exchange agreements and establish an office for the Zero Hunger program in 100 municipalities.

As well as supporting government plans to increase the percentage of children and mothers receiving health and nutrition care in poor jurisdictions, this development policy loan will help establish a consensus around social policies, particularly by way of strengthening the Social Economic Council (CES), an agency that includes representatives from cooperatives, the private sector and unions that holds discussions on public policy.

The US$200 million “Fiscal Space for Greater Opportunity” development policy loan has a 25-year maturity period, including a 10-year grace period.

 

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