World Bank: US$500 Million to Consolidate Colombia’s Social Protection System

February 23, 2010

WASHINGTON, DC, February 23, 2010 – The World Bank’s Board of Directors approved a US$500 million development policy loan (DPL) today to promote an efficient, equitable and inclusive Social Protection System in Colombia, as well as to mitigate the impact of the global economic crisis on that South American country.

The project seeks to consolidate a Social Protection System that responds adequately to the needs of all Colombians in terms of:

  • Improvement of consumption (by means of programs that allow them to save for retirement, as well as unemployment and health insurance);
  • Prevention of poverty (by means of aid to help the poor reach a minimum of well-being and access to basic services); and
  • Accumulation of human capital (through training and the accrual of work experience to promote higher levels of employment).

“We have made advances in terms of social coverage and we continue to work toward improving its efficiency. With the support and experience of the World Bank, we intend to guarantee the sustainability of reforms aimed at offsetting the impact of the international financial crisis”, said Esteban Piedrahita, General Director of the National Planning Department.

The project seeks to reinforce the current Social Protection System by way of greater integration, efficiency and equity within social security; improved selection, effectiveness and coordination of existing social programs; and greater quality in training programs and job brokerage services.

“The government’s response to this crisis proves that comprehensive social protection programs managed to cover a significant portion of the poor. This is the result of a decade of investments in social sector programs and in management and IT systems. However, the crisis has also highlighted the need to widen those programs’ coverage, to integrate and coordinate their activities better, as well as to develop broader labor policies and programs which, taken together, would derive in more ambitious results,” said Gloria Grandolini, World Bank Director for Colombia and Mexico.

In order to achieve these objectives, the project intends to:

1)   Consolidate efforts to widen the coverage of inclusive social protection systems, such as the job brokerage and training system or health insurance;

2)   Promote the construction of an equitable system that serves the poorest and most vulnerable people by improving the identification and selection of beneficiaries, and better coordination of social assistance;

3)   Improve the efficiency of social protection networks through the optimization of information systems, rationalization, process simplification and improvements in program design.

Some of the expected results include:

  • Stabilize the number of people affiliated to the Integrated Table of Payroll Contributions (Planilla Integrada de Liquidación de Aportes, PILA) at 8.8 million;
  • Increase the level of the Pay for Training Unit, part of the benefit system for children under 12, in order to provide services similar to the contributory system’s;
  • Serve at least one million families in the Juntos (Together) Strategy in 880 municipalities;
  • Implement the new Identification System for Potential Program Beneficiaries (SISBEN, in Spanish) in all municipalities;
  • Increase the number of registrations for social assistance programs at the Single Register for Affiliates (RUAF, in Spanish) by 2 percent – based on 2009 figures;
  • Certify at least 50 courses and their respective institutions according to high quality management regulations.

In order to achieve the aforementioned, the World Bank is working within a comprehensive framework that includes efforts to mitigate the impact of the economic crisis on the poor, which entails a gradual economic recovery by way of strengthening the financial sector, support for infrastructure investments and clean energy, and the provision of high-quality basic social services.

The body in charge of implementing this loan is the Finance Ministry (MHCP), which in turn has instructed the National Planning Department (DNP) to perform the main role in technical issues, as well as to coordinate activities across the different agencies involved in the project’s implementation (MHCP, DNP, Social Protection and Education Ministries, National Learning Service and Social Action).

The loan has a variable interest rate (6-month LIBOR), plus a fixed margin and currency exchange options, has a maturity period of 27 years and an 8-year grace period. The project is expected to end on December 31st, 2010 and is an integral part of the World Bank’s commitment and dialog within a broader agenda that includes knowledge and consultancy services to support the medium term economic policy agenda.

Media Contacts
In Washington
Gabriela Aguilar
Tel : (202) 473 6768
In Colombia
María Clara Ucrós
Tel : (571) 326-3600