New World Bank Group Strategy to Support Reduction in Extreme Poverty and Inequality in Paraguay

December 16, 2014

It envisages up to US$1.1 billion in financing over the next four years                          

Washington, December 16th, 2014 – The World Bank Group’s (WBG) Board of Executive Directors today analyzed a new partnership strategy with the Republic of Paraguay for the 2015-2018 period, which will support the country’s efforts to reduce extreme poverty to 9 percent by 2018 and boost income levels among the poorest 40 percent of the population.

“The World Bank’s technical and financial support to Paraguay, via this new Partnership Strategy, will support the country’s efforts to fulfill its medium and long term development goals, which seek a sustained reduction in poverty and increased equality. The objectives reflect Government priorities, focused on achieving sustained and equitable economic growth, in such a way that its benefits translate into better living conditions for the population, especially those living in poverty and vulnerability,” stated German Rojas Irigoyen, Minister of the Treasury of Paraguay.

The WBG strategy will support the National Development Plan, whose main objectives include eradicating poverty, strengthening economic growth and improving the country’s integration with the world through improved competitiveness.

“Paraguay is making significant strides in reducing poverty and inequality, the cooperation program agreed with the government will contribute to the creation of a more inclusive society with an innovative and productive private sector that creates jobs and opportunities, where small-scale farmers have greater and better opportunities to be competitive and civil society is empowered for social accountability,” said Jesko Hentschel, World Bank Director for Paraguay, Argentina and Uruguay.

The new strategic partnership emphasizes knowledge exchange and cooperation via technical consultancy and analytical study services that will be part of programmatic commitments. It is expected that the WBG’s financial commitments for the period will total between US$1 and US$1.1 billion in operations destined both for the public sector, via the International Bank for Reconstruction and Development (IBRD), as well as the private sector, via the International Financial Corporation (IFC). The Multilateral Investment Guarantee Agency (MIGA) will also play an active role in the implementation of the strategy, with the objective of attracting a higher level of foreign investment into the country.

“Paraguay has a dynamic and growing private sector that in recent years has received significant support from the IFC. The new strategy will allow us to strengthen our support for agro-industry and the financial sector, with particular attention on promoting financial inclusion. Another key aspect of the IFC’s operations in the country will be to support the effective participation of the private sector in the logistics,” pointed out Salem Rohana, IFC Regional Manager for Paraguay, Chile, Uruguay and Argentina.

The strategy agreed with the Government of Paraguay identifies three strategic objectives:

1. Strengthen the response capacity and resilience to economic volatility: help small-scale rural producers in the poorest areas of the country deal with price variations, facilitate their access to financial services, improve their agricultural risk management capacity and promote sustainable agricultural practices. At a macro level, efforts will focus on reinforcing public financial management in order to help mitigate the impact of growth volatility and facilitate private sector investments. For example, it will contribute to increasing small farmers’ access to agricultural insurance and increase the percentage of adults with a savings account.

2. Improve the quality of public services among the poorest, most vulnerable population: This includes WBG support to improve revenue collection, permitting the allocation of more resources to initiatives that will help create opportunities for the poor to improve their quality of life. Expanding access to quality basic services —water, electricity, sanitation, health, education— in the poorest areas will be key in attaining this objective. In this context, the WBG program will support, for example, projects aimed at improving access to sanitation services in urban areas among the poorest, most vulnerable populations, as well as improving the drinking water supply in the most isolated rural communities.

3. Promote inclusive markets: The WBG will support Paraguay in the construction of better roads and development projects to ensure small-scale farmers increase their productivity and upgrade their market connectivity. For example, it will promote rural productive development programs in the communities of Concepcion, San Pedro, Canindeyu, Caaguazu and Caazapa. In terms of infrastructure, it will support investments to reduce travel time, with the objective of improving rural connectivity.

The IBRD’s active portfolio in Paraguay consists of four investment loans totaling US$375 million. The Bank also administers a portfolio of 10 trust funds totaling US$5.6 million. For its part, the IFC’s portfolio reaches US$292 million in more than 25 projects backing the development of a competitive private sector, with a special emphasis in guaranteeing regional integration via trade. In particular, the IFC is focused on: i) supporting the development of the agricultural market; ii) improving and sustaining economic growth and trade by improving transportation services, infrastructure and communication networks; and iii) strengthening the financial system and supporting access to financing among SMEs. The IFC intends to invest close to US$600 million in sustainable private sector projects in Paraguay during the next four years.

Media Contacts
For World Bank
Marcela Sanchez
Tel : 202 473-5863
In Asunción
Ruth Gonzalez Llamas
Tel : 595 21 218 1000
Adriana Gomez
Tel : 202 458-5204