Washington, June 11, 2019 – The Board of Directors of the World Bank Group (WBG) approved the 2019-2023 Country Partnership Framework for Ecuador today. Through this Strategy, the two partners will work together to achieve the goals of poverty reduction and equality. This document establishes a financing and technical assistance program to support the country’s efforts to achieve inclusive, sustainable development and growth.
The Strategy, prepared in coordination with the Government of Ecuador and based on consultations between the WBG and a variety of civil society and private sector groups, supports and is aligned with the Prosperity Plan of the Ecuadorian government. It emphasizes the need to support macroeconomic stability, protect the most vulnerable sectors and reactivate sustainable growth, prioritizing three work areas: (i) inclusive growth; (ii) strengthening of human capital and protection of the vulnerable population; and (iii) improvement of institutional and environmental sustainability.
“At a time when Ecuador is facing the challenge of protecting its human capital and social benefits during a process of stabilizing macroeconomic conditions, the World Bank reiterates its support to the country,” said Alberto Rodríguez, World Bank Director for Bolivia, Chile, Ecuador and Peru. He added that “this is an important step toward strengthening an inclusive, sustainable development agenda.”
The World Bank, the International Finance Corporation (IFC, a WBG institution that supports the private sector) and the Multilateral Investment Guarantee Agency (MIGA, a WBG agency that offers political risk insurance and credit enhancement guarantees), will work together to move the Strategy forward.
For Richard Martínez, Minister of the Economy and Finance, “this news is another demonstration of the international community’s support to the country. After 12 years, the World Bank Group has proposed a complete strategy for our country, which, on the one hand, will contribute to achieving the objectives of the Prosperity Plan, and on the other, of reiterating the confidence of the international community in our economic program. The focus of this strategy will be the strengthening of the social and productive sectors and the country’s capacity to adapt to the challenges of the fourth industrial revolution.”
“The IFC will continue to support private-sector development to create jobs and an economy that improves the quality of life of Ecuadorians,” said Gabriel Goldschmidt, IFC Director for Latin America and the Caribbean. “We will work to ensure that Ecuador can improve its investment climate and that the private sector can become the driver of inclusive economic growth.” As of May 2019, the IFC portfolio totaled US$ 428 million in projects for the financial and food and drink agrobusiness sectors, among others.
The work areas and objectives established in the 2019-2023 Country Partnership Framework are interlinked and complementary. Developing human capital with the skills the labor market needs, along with policies based on evidence and recent information, will not only drive inclusive growth, but will also improve the country’s resilience in response to disasters and macroeconomic shocks.
Additionally, more efficient spending and the adoption of international standards for public sector transparency will contribute to the sustainability and protection of social services. The simultaneous progress of the two first areas will help improve Ecuador’s access to financial markets and will lay the groundwork for strengthening institutions as the country advances down its path toward growth.
An additional US$ 500 million for Ecuador
The World Bank Group Board of Directors also approved a US$ 500 million loan to support the program of structural reforms that the Government of Ecuador has been implementing since last year. This financing is a part of the support from the international community that was announced during the first quarter of the year and that be disbursed in the coming weeks. This US$ 500 million is in addition to the US$ 350 million approved in April for the protection of the most vulnerable populations.
Through this instrument, the WBG recognizes the Ecuadorian government’s efforts to increase efficiency in the mobilization and allocation of government resources, the elimination of barriers hindering private-sector development and policies for including the most vulnerable population groups. The process to prepare the Federal Government Budget is noteworthy among the key reforms. This process is aligned with the objectives of fiscal sustainability; increased efficiency in procurement of goods and services; personnel management; the elimination of barriers to entry and operations of companies, and; the reduction of inefficiencies in the financial sector. Additionally, the country is working on targeting social programs, increasing access to formal employment – especially for women and young people – and promoting financial inclusion through increased transparency and regulation of the cooperative sector and the expansion of its reach.
Beginning next year, the World Bank is considering an annual financing to the government of between US$ 500 million to US$ 800 million. Currently, the WBG portfolio has nine active projects totaling US$ 1.74 billion.
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