Peru: World Bank Approves $20 Million Loan To Improve Irrigation Systems In The Sierra

July 27, 2010

WASHINGTON DC, July 27, 2010 — The World Bank’s Executive Board of Directors approved a loan for $20 million today that will help Peru develop an irrigation project in the Sierra, in an effort to improve agricultural yield in the region.

The project’s goal is to increase and improve agricultural performance in the Sierra areas. By improving irrigation technology, farmers will have enough water to secure traditional harvests and, in time, shift to higher export value crops.

Through the Subsector Irrigation Program (PSI), the Ministry of Agriculture will be coordinate and implement project activities, with the technical assistance of the World Bank.

“We are extremely happy with this loan as it will help us modernize water resource management in the Sierra and promote social and economic development in the region’s rural areas,” said the Minister of Agriculture, Adolfo De Córdova, who added that the project will help develop the financial and management skills of Water User Boards, a relevant organization within the water resource chain.

Córdova Vélez also noted that one of the priorities of the agricultural sector is to expand the use of technology in irrigation systems in the country’s coastal and mountain areas in order to provide sound and adequate water resource management for agricultural and livestock purposes in close coordination with farmers’ organization.

Although Peru has one of the best economic growth rates in Latin America, poverty in the Sierra is far above national averages and considerably higher in rural areas, which poses a challenge for the country’s economic sustainability.

Additionally, the largest share of household incomes in the area comes from agriculture. However, in 80% of the cases this income is insufficient to make a living, which often forces farmers to resort to livestock-related activities.

The proposed project aims to improve irrigation performance based on local soil and water practices and residents’ expectations. This means taking advantage of some of the positive features found in the region, including good plant health conditions and strong community work traditions, in addition to spray and trickle irrigation systems which have proven successful in former projects.

“During the past ten years, the Bank has been effectively engaged in irrigation projects in Peru, specifically along the coast, with the successful water use for agriculture program,” said Felipe Jaramillo, World Bank Director for Bolivia, Chile, Ecuador, Peru and Venezuela. “With the experience gained, the World Bank can play a relevant role in helping the Government of Peru deliver on its pledge to promote sustainable rural development.”

  • The Sierra Irrigation Project has four main components, the with the following key goals:
    Improve irrigation technology by funding pre-investment studies, design, implementation and supervision of new systems.
  • Modernize and rehabilitate exiting irrigation systems.
  • Develop and strengthen the skills of agricultural producers and markets.
  • Formalize water rights and achieve efficient and accountable use.

This project is consistent with the Country Partnership Strategy (CPS) signed between the World Bank and Peru in 2006, which seeks to improve the living conditions of the population in the rural Sierra by promoting economic growth and strengthening human capital.

The total cost of this project is $48.28 million; $24 million will be provided by the government and $4.33 million by the Water Users Board. The $20 million provided by the World Bank will be repaid in 18 years and will include a grace period of 17.5 years with a fixed interest rate of 0.25%.


Media Contacts
In Washington
Stevan Jackson
Tel : (202) 458-5054
In Peru
Sandra Arzubiaga
Tel : (51 – 1) 615-0660