Peru/WB: US$330 Million to Reinforce Efficiency of Social Spending

April 9, 2009

WASHINGTON, April 9, 2009 - Ensuring funds for social spending and countercyclical measures to help Peru face the impacts of the international financial crisis is one of the main objectives of the US$330 million loan approved today by the World Bank’s Board of Executive Directors.
The Second Programmatic Social Reform Loan aims to support the Government of Peru to improve the quality of education and health services and social programs, such as the well-known Juntos (“Together”) program.
“This loan decisively supports government actions to protect the rights of the poorest citizens so they have suitable nutrition and access to quality health and education services,” said Prime Minister Yehude Simon, while adding that “support for the Juntos program and universal health insurance move forward key social reforms will improve equal access to opportunities in the country.”
The loan also aims to make education and health services more efficient in order to achieve tangible social impacts.
According to Minister of Finance Luis Carranza, his ministry “entirely supports efforts needed for social spending to result in visible outcomes among the most vulnerable populations. This reform program seeks to ensure that accountability for achieving results is shared among all levels of government, as well as by the population in its demand for quality health and education services. It will also strengthen initiatives such as Juntos or RENIEC programs that address malnutrition, lack of documentation, and other social problems.”
“This program has arrived just on time to support efforts of the Peruvian Government to restructure the Juntos program, develop a results-oriented budget, set goals and standards for achievements in student learning and under-two children, and reduce mother-infant mortality rates,” added Felipe Jaramillo, World Bank Director for Bolivia, Ecuador, Peru, and Venezuela.
The reforms will consolidate operational improvements and administration of the Juntos conditional cash transfers program in order to strengthen accountability between the government and parents to ensure that children are growing normally. It also ensures participants receive counseling services, take nutritional supplements as needed up until age two, and ensures pregnant women have access to health services.
The initiative will involve regional governments in order to establish incentives for health service providers and educational institutions to improve coverage and quality.
In Peru, one in three children under five suffers from chronic malnutrition, and barely 50 percent of rural women receive medical attention from qualified personnel or institutions during labor, whereas the national average is 76 percent. This lack of coverage puts one out of every two rural pregnant women and children at risk. Only 16 percent of second-grade children reach expected level of educational outcomes.

In this context, the loan specifically contributes to:

  • Establishing clear, results-oriented goals and quality standards for education and health services.
  • Building an accountability system between doctors, health workers, teachers, principals, health centers, and parents.
  • Broadening coverage and quality of results monitoring.
  • Improving nutrition information systems.
  • Strengthening reforms in Juntos piloted in the San Jerónimo District, Apurimac, in order to improve efficiency of operational and administrative processes as well as the baseline assessment. Moreover, it will expand and improve efficiency of the SIS as well as the supply and demand for births in medical institutions.
  • Implementing the Ministry of Education’s initiative to make second-grade reading and mathematics achievement assessment results transparent so that they can be discussed with parents to improve results.

Finally, support will be provided for the National Identity and Marital Status Registry (RENIEC in Spanish) in order to facilitate birth registrations and include identification numbers on birth certificates. Lack of documentation is a factor contributing to the exclusion of more vulnerable families from social programs.
Funding approved today totals US$330 million and consists of a credit line with a fixed-margin loan, a 21.5-year payback period and a 12.5-year grace period.

Media Contacts
In Lima
Sandra Arzubiaga
Tel : (511) 615-0660
In Washington
Gabriela Aguilar
Tel : (202) 473-6768