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World Bank US $230 Million package Supports El Salvador's Economic Growth Plan

July 19, 2010

SAN SALVADOR, July 19, 2010 - World Bank Group President Robert B. Zoellick and President of El Salvador Mauricio Funes today reaffirmed the Banks support to create job opportunities for tens of thousands of Salvadorians and El Salvador’s economic recovery at a signing ceremony to highlight three loans worth US $230 million.

“The World Bank is pleased to support El Salvador’s plan to spur growth and boost social gains made before the onset of the global economic crisis, said Zoellick. “This package is designed to help the poor of El Salvador, and I look forward to its speedy and effective implementation.”

El Salvador’s economy is gradually recovering from the impact of the global financial crisis. Economic activity increased by 1 percent in the first quarter of 2010 and consensus forecasts estimate a 1.2 percent growth for 2010, on account of a significant fall in foreign workers’ remittances and exports to the United States, El Salvador’s main trading partner.

This new financing includes $100 million to support the country’s recovery through sound economic and social policies that are vital to addressing the needs of Salvadorians, particularly the most vulnerable, by protecting its income and consumption, and ensuring its access to health services.

Another US $50 million will provide temporary income support to the urban poor under the Programa de Apoyo Temporal al Ingreso (PATI) which provides a monthly income transfer to targeted individuals in exchange for their participation in community activities and in training programs.

The US $80 million Local Development Project will strengthen local governments, considered critical to provide essential basic services for the people (water and sanitation, electricity, street lightning, public infrastructure) and at the same time create new jobs in all 230 municipalities.

The loans are part of a $650 million lending envelope planned for the 2010-2012 Country Partnership with El Salvador. The World Bank has been supporting President Funes’ administration through a combination of instruments, including lending (both budget support and investment), analytical work, and policy dialogue and advice.

During his meeting with President Funes, Zoellick explained how the World Bank could support El Salvador’s growth strategies, and emphasized the need to respect the rule of law, encourage private sector development, and build up governance, democracy and anti-corruption efforts.  Zoellick said it was particularly important to overcome tensions in past conflicts and treat participants fairly.


The three loans were approved by the Bank in October, 2009, and April, 2010. They require approval of the Salvadoran Congress, which is expected to finalize the approval process shortly. The signing ceremony involved various legal documents associated with the package. Specifically, the three new loans break down as follows: The $100 million Sustaining Social Gains for Economic Recovery Development Policy Loan (DPL) is instrumental in assisting the El Salvador’s government in setting up a recovery- oriented economic policy while maintaining and increasing social protection, particularly among the most vulnerable groups of the population.

The Income Support and Employability Project ($ 50 million) is key to a successful economic recovery strategy and, if combined with re-training and channeling of job opportunities, can bring opportunities for all Salvadorians.∙

The $80 million Strengthening Local Governments Project will improve the administrative, financial and technical processes, systems and capacity of local governments to deliver basic services, as prioritized by local communities.

Local governments are crucial in the development process and need to provide quality services and be accountable to their citizens.

Media Contacts
In Washington
Sergio Jellinek
Tel : +1 (202) 458-2841
In El Salvador
Gabriela Aguilar
Tel : (503) 7850-1296