WASHINGTON, April 22, 2019 – The World Bank Group Executive Board approved a project to improve the institutional performance of municipalities and increase access for citizens to services and infrastructure resilient to adverse natural events in El Salvador. The US$200 million Local Economic Resilience Project will benefit approximately 4.5 million Salvadoreans in all 262 municipalities.
The Project aims to boost local economic development by aligning public finance management goals and results with financing for resilient municipal investments. It will also support the creation of a competitive fund available to all municipalities to finance strategic regional investments at a multi-municipal scale.
This Project supports local and national efforts to strengthen institutional capacity, improve municipal fiduciary systems, increase transparency in managing debt, income and public expenditure, enhance delivery systems and oversight mechanisms, and increase municipal capacity to design and manage resilient infrastructure.
“A priority for the Government of El Salvador is supporting the municipalities to strengthen their financial management with efficiency and transparency and to make investments that meet environmental and disaster risk management standards,” said Nelson Fuentes, Minister of Finance of El Salvador. “This is an investment legacy that will directly benefit communities in all 262 municipalities,” Fuentes added.
The Project, to be implemented by El Salvador’s Social Investment Fund for Local Development (FISDL, for its initials in Spanish), includes five components:
1. Investments in services and resilient municipal infrastructure to support local economic development (US$116 million). This component is designed on a performance-based approach focusing on four areas: i) enhanced fiduciary systems and greater transparency in managing debt, income, and public expenses; ii) improved service delivery systems; iii) improved municipal government capacity to design and manage infrastructure assets in a resilient manner; and iv) enhanced accountability and oversight mechanisms. Improved municipal performance in these areas will positively impact services for the population.
2. A competitive fund for high-impact investments at the regional scale through inter-municipal cooperation (US$54 million). Projects financed under this component may include logistics improvements, markets, fairs and supportive infrastructure along tourist corridors. Projects to be financed must have high potential to create job opportunities, especially for women, youth at risk, migrant returnees and minorities, and high potential to increase local competitiveness and productivity.
3. Institutional strengthening and capacity building to improve public finances, disaster risk management and climate resilience at the municipal level (US$10 million).
4. A Contingent Emergency Response Component to allocate funds for disaster response and recovery in case of adverse natural events (US$10 million).
5. Project management and implementation activities (US$9.5 million), including evaluations of activities and results and the creation of an engagement platform for citizens to access the status of infrastructure works funded by the Project and provide feedback.
“Investments to promote economic development and resilience can generate new jobs and new economic opportunities at the municipal level, which help in reducing unemployment, crime and migration, especially of the youth. Enhancing the municipalities’ performance, transparency and capacities will lead to sustainable investments and better livelihoods for Salvadoreans, primarily the poor and vulnerable,” said Oscar Avalle, World Bank Country Manager for El Salvador and Costa Rica.
The US$200 million loan for the Local Economic Resilience Project in El Salvador has a final maturity of 25 years including a grace period of 5 years.
Contacts:
In San Salvador: César León, +503 2526-5900; cleonjuarez@worldbank.org
In Washington, DC: Àngels Masó, +1 (202) 458-7456, amaso@worldbank.org
To learn more about the World Bank’s work in Latin America and the Caribbean, please visit our web page
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Last Updated: Apr 22, 2019
