WASHINGTON DC, March 19, 2020 - The World Bank Board of Directors approved today a financing package for a total of US$300 million to support the Paraguayan economy. At a time when public resources are being used to finance the fight against the current pandemic, World Bank financing will help Paraguay face the impact of economic, climatic and public finance vulnerabilities and will contribute to promoting rural productivity by improving access to markets.
"Given the present situation, Paraguay has decided to take steps forward promoting actions aimed at strengthening and consolidating the national economy. These two projects will give us the capacity to react to adverse situations that may affect not only the economy but also the well-being of the most vulnerable communities. It will also generate opportunities that will allow us to reach the goal of achieving a better quality of life for our inhabitants by developing more favorable conditions for productivity, local and national development," said Benigno López, Minister of Finance of Paraguay.
The financing package includes two operations. On the one hand, a US$200 million financing for the Economic Management Development Policy Loan with a Deferred Disbursement Option that supports the country's efforts to reduce its vulnerabilities to external economic, environmental and public finance impacts, as well as mitigate its negative effects on the economy.
On the other hand, financing of US$100 million for the Market Access for Agricultural Products Project (PIMA, by its acronym in Spanish) that will be implemented by the Ministry of Agriculture and Livestock (MAG). The project will finance productive agricultural activities that will benefit around 170,000 small and medium size organized farmers and indigenous agricultural producers. This initiative will also strengthen producer organizations and indigenous communities and public institutions linked to rural development, and will promote the incorporation of the use of new agricultural technology that would allow for greater competitiveness and sustainable access to internal and external markets.
"The poorest households are especially vulnerable to economic and climatic shocks and food price movements. They are also those who suffer the most from pandemics such as the coronavirus. We are committed to promoting an inclusive Paraguay and these projects will contribute to improve productivity and create protection mechanisms for the poorest in the face of global economic or climatic challenges," said Jordan Schwartz, World Bank Director for the Southern Cone.
The First Economic Management Development Policy Loan with a Deferred Disbursement Option will contribute to more resilient growth by supporting reforms to achieve greater competitiveness, economic diversification and trade facilitation. It will also contribute to the efforts being made to promote economic growth that is more environmentally sustainable and more resistant to climatic variations. Finally, it will help improve economic resilience through more efficient and responsible management of public resources.
The Agricultural Market Insertion Project (PIMA) will improve the productive capacity and access to markets of producer organizations and indigenous communities in the Eastern Region of the country. It will include mechanisms for small and medium producers to carry out investments that improve their productivity and develop more competitive and profitable enterprises with greater opportunities for sustainable access to markets.
Both projects are part of the World Bank's Partnership Strategy with Paraguay for the 2019-2023 period, which supports the country's efforts to evolve towards a resilient and sustainable economic model, with an emphasis on investment in human capital (health, education and social protection) and improvements in the fight against corruption and institutional strengthening.
The financing of First Loan for Economic Management Development Policies with a Deferred Drawdown Option is a fixed spread loan, repayable in 31 years with a grace period of 9 years. The financing of Agricultural Market Insertion Project is a variable margin loan, repayable in 31.5 years with a grace period of 8 years.
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