Water and sanitation, disaster risk management, and economic policy topped the list of priorities supported by nearly $12 billion
WASHINGTON, July 24, 2013 - The World Bank Group (WBG) committed $11.8 billion in fiscal year 2013 (July 2012 to June 2013) to support Latin America and the Caribbean resilience in the midst of global turmoil. This includes resources from the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
The World Bank (IBRD and IDA) maintained its strong support for the region approving $5.2 billion in new loans in FY13, nearly $4.8 billion from IBRD and $435 million from IDA, the Bank’s fund for the poorest countries. Support was aimed at generating opportunities for all through public and private sector projects that expand public services, improve regional productivity, competitiveness and integration, create new quality jobs and assist those most in need.
Brazil ($3.1 billion), Colombia ($600 million) and Uruguay ($408 million) were the largest borrowers in the region. Haiti also received $235 million in IDA grants. Water and sanitation, disaster risk management, and economic policy received the most funding. Latin America and the Caribbean received the largest share of IBRD’s total global new lending at 32 percent, and 16.5 percent of total IBRD/IDA lending.
IFC, which focuses on supporting the private sector, provided a record $6.5 billion to 129 projects in Latin America and the Caribbean in FY13. This included $1.7 billion mobilized from other financial institutions. In the region, IFC clients support about two million women through jobs, education and entrepreneurial opportunities. One in eight people in the region benefit from infrastructure projects supported by IFC. Its financial sector clients provided 29 million loans valued at $217 billion to micro, small and medium enterprises.
Supporting smaller economies continues to be a priority for IFC, with $1 billion invested in Central America and the Caribbean in FY13. The frontier regions of North and Northeastern Brazil and the Amazon are also a focal point with $409 million invested. Investments that help mitigate or adapt to climate change reached $522 million, with a focus on renewable energy and energy efficiency.
During fiscal year 2013, MIGA provided support for three projects in Central America with $67.1 million in political risk insurance coverage. MIGA insured two projects in Nicaragua: a 44-megawatt wind farm in Rivas province and a bamboo plantation converted from degraded land in El Rama. MIGA also supported a project involving import inspection equipment and services in El Salvador.
LAC continues to grow and turn into a middle class region
Gross Domestic Product in Latin America and the Caribbean grew 3 percent in 2012. Growth is expected to remain robust, at 3.5 percent, as strong domestic demand compensates for weak global economic conditions.
Steady growth and sound economic policies improved the lives of millions in the region over the past decade, with more than 70 million people lifted out of poverty and 50 million joining the ranks of the middle class between 2003 and 2011. For the first time ever, the number of people belonging to the middle class surpassed the number of poor, a sign that Latin America and the Caribbean is progressing toward a middle-class region.
This year, the severe downside risks to the global economy have eased significantly compared to last year, reflecting progress in the Euro Area towards reducing fiscal and banking solvency risks and an easing in fiscal-cliff related risks in the United States. However, Latin America & the Caribbean still face the challenge of finding the optimal balance between macroeconomic policies to stimulate domestic demand in the short term and structural reforms to enable faster growth over the longer term.
For more information about the World Bank Group's total support to developing countries in FY13 click here.