WASHINGTON DC, 26 August 2010 — The World Bank’s Board of Directors approved a US$ 100 million loan today to improve fiscal management, provide more efficient public services, and strengthen the competitiveness of Peru as part of its country assistance strategy.
The new commitment, the last one in a four-loan programmatic series, supports the Peruvian government’s efforts to improve the institutional management of its public sector and the country’s business climate.
The loan will thus contribute to improve the efficiency and quality of public spending, with the aim of achieving budgetary savings that can then be used in social programs designed to combat poverty, as well as in the development of better public services for citizens.
“Solid macroeconomic fundamentals and adequate policies enabled Peru to come out unscathed from the international financial crisis. Along the same line, Peru continues to pursue activities aimed at consolidating a sustained economic growth based on greater efficiency and equity in the allocation of public resources, backed by responsibility and transparency,” pointed out Carlos Felipe Jaramillo, World Bank Regional Director for Bolivia, Chile, Ecuador, Peru and Venezuela.
Jaramillo also indicated that this operation emphasizes the implementation of key reforms to public policies in order to obtain tangible results in the execution of public spending. The implementation of results-oriented budget practices and technical assistance for public acquisitions will improve investment capacity.
The objectives of the World Bank program include:
- Sustainability and transparency of the Peruvian government’s fiscal policy;
- Simplification of the tax system;
- Consolidating progress made by the Regional and Local Public Investment Promotion Fund (FONIPREL);
- Increasing transparency, accessibility and agility of public sector processes;
- Results-oriented budget practices that are perceived clearly by citizens;
- Strengthening the country’s competitiveness through the expansion of international trade and improvement of the business climate.
The US$ 100 million loan, approved this Thursday, establishes a variable interest rate with a 13.5-year maturity period and an 11-year grace period.