The World Bank in Latin America and the Caribbean

Latin America and the Caribbean has proved relatively resilient in the face of rising debt stress, inflation, and uncertainty arising from the Russian war in Ukraine. Income and employment have largely recovered from the pandemic, and markets remain cautiously optimistic about the near future.

As for poverty, the pandemic exacerbated it from 24 percent to 26.5 percent between 2019 and 2021. In terms of inflation, excluding Argentina, the average is expected to decline to 5 percent in 2023, after reaching 7.9 in 2022.

Growth forecasts for 2023 have been steadily downgraded over the past six months to 1.4 percent. For 2024, the figure is 2.4 percent, which is expected to remain in 2025.

In terms of education, students have lost an average of two-thirds of their face-to-face school days, either partially or completely since the beginning of the pandemic. This equates to an estimated loss of 1.5 years of learning and mostly affects the youngest and most vulnerable, who are at risk of losing 12 percent of their total lifetime earnings.

Levels of informality are also of concern. Costly regulations have kept most firms informal, limiting their access to finance. Labor markets are also dominated by informality, which increased from 56.7 percent pre-pandemic to 63.4 percent in 2021, and social assistance is low.

Currently, the region has the largest migration crisis in history. In addition to traditional flows from Central America and Mexico in the United States, Venezuela and Haiti have been the source of large recent outflows. About 7.5 million Venezuelans have fled the country since 2015 and about 1.7 million Haitians are abroad adding to the 2 million internally displaced.

The challenging situation is exacerbated by increasingly severe effects of climate change, which have already caused significant economic and social losses. Hurricanes, floods and droughts are becoming more frequent, and it is estimated that 17 million people could be forced to leave their homes and nearly 5.8 million people could fall into extreme poverty by 2030, mainly due to a lack of safe drinking water, as well as increased exposure to excessive heat and flooding.

Having said that, green growth opportunities through renewable electricity - solar, wind and geothermal - and vast natural capital - water, trees, biodiversity - offer the potential for new industries. Other opportunities emerge in long-term policies such as reducing systemic risks, boosting investment in traditional and digital infrastructure, and improving human capital. In the short-term, opportunities lay in preserving macroeconomic stability, promoting advances in customs and transport regulatory and improving export and investment promotion agencies.

Last Updated: Apr 04, 2023

The Bank supports countries in the region by protecting and investing in human capital, building resilience to better manage and withstand shocks, promoting green and inclusive growth, attracting private investment, strengthening institutions, and engaging with traditionally excluded groups, including Indigenous peoples, Afro-descendants, and rural communities. We also help countries implement structural reforms and promote inclusion, gender equality, and green growth.

In fiscal 2022, we focused on reversing the impacts of the COVID-19 crisis and promoting more equitable and sustainable growth across the region. This includes supporting health, social protection, and education, as well as aiding businesses, fostering job creation, and supporting the purchase and deployment of vaccines.

Promoting inclusive growth

We are supporting inclusive growth by helping countries improve productivity and job creation, strengthen social protection systems, promote digital transformation, and create opportunities for all. In Bolivia, a $254 million project has supported the COVID-19 response since the pandemic began. This includes expanding social protection by providing emergency cash transfers to more than 3.5 million people, over 1.5 million of them women. In the Caribbean, we are helping expand 3G networks to reach over 95 percent of people in Grenada, St. Lucia, and St. Vincent and the Grenadines, as well as connect nearly 70,000 people in these countries to high-quality digital networks. This will provide access to key services and improve links to markets.

Investing in human capital

We work with countries to foster access to health services and quality education for all. In Colombia, we supported the government’s efforts to integrate Venezuelan migrants, which included ensuring access to education for thousands of migrant children. We are also supporting two programs totaling over $1.4 billion to address the country’s migration challenges, promote fiscal sustainability, and improve market competitiveness for more inclusive growth. In the Dominican Republic, we provided $100 million to support the COVID-19 response, including health measures to ramp up supply provision and service delivery, financing for tests, and equipment for hospitals, including more than 4,200 isolation beds.

Fostering a green and sustainable recovery

Latin America and the Caribbean is highly vulnerable to weather-related disasters and the growing challenges of climate change, affecting the poor and disadvantaged most. We work with countries to support green, sustainable growth and build more resilient infrastructure. In Brazil, a $300 million project is improving the road network and providing all-season access for 400,000 people in the state of Tocantins. It is also supporting small business development in agriculture and tourism, improving educational services, and enhancing environmental management. In Argentina, we are promoting the sustainable use of nature in almost 200,000 hectares of native forest, reducing pressure on ecosystems by generating economic alternatives for rural communities. These efforts have helped improve the livelihoods of about 1,000 rural farmers and Indigenous people living in or around these protected areas through honey production, sustainable livestock, and nature-based tourism.

Caribbean countries such as Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines are especially vulnerable to climate-related events. Promoting awareness about sustainable ocean resources is key to transitioning to a vibrant blue economy, where the region’s natural assets may offer economic opportunities to address poverty and unemployment.

Supporting countries' development goals

In addition to financing, we provide countries with advisory services, technical assistance, and analyses to support their development goals. Our regional report, Strengthening Public Health Surveillance through Wastewater Testing, looks at how countries can improve the detection, diagnosis, control, and monitoring systems for viruses that cause diseases like COVID-19. Our Inclusion of Persons with Disabilities in Latin America and the Caribbean report discusses the physical and legal barriers that people with disabilities face and how to promote their inclusion. In The Fast Track to New Skills report, we emphasize the positive impact that technical degrees, tertiary careers, and advanced vocational training programs can have in times of crisis, such as the pandemic, when millions of people across the region need to acquire skills for a rapidly changing world of work.

We also advise countries on ways to promote inclusion and gender equality. In Mexico, we proposed policy actions to enhance female labor force participation and reduce teen pregnancy, especially among the most vulnerable. And in Chile, we helped launch an integrated case management platform to strengthen the governance of institutions that help survivors of gender-based violence, enabling timely responses and case monitoring to prevent delays and recurring violence.

Last Updated: Apr 04, 2023

Commitments during fiscal year 2022, which ended in June 2022, include a total of US$10.4 billion in loans for 55 operations from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), known as the World Bank.

In response to COVID-19, which has severely impacted the lives and livelihoods of millions of people in Latin American and the Caribbean countries, the World Bank Group committed a record US$29.1 billion to the region since the beginning of the crisis in April 2020 and throughout fiscal year 2021, which ended in June 2021.

Some of the programs that have received financial support from the World Bank Group include:

• A US$700 million loan for Ecuador to continue implementing policies that address structural challenges to achieve fiscal sustainability, promote job creation and protect the most vulnerable people, as well as to strengthen low-carbon development and meet the commitment to achieve carbon neutrality by 2050.
• In coordination with the Ministry of Social and Family Development in Chile, the World Bank is implementing the Local Social Management project (Gestión Social Local in Spanish) project, a new methodology for the integrated delivery of social services and benefits in municipalities. Through a "one-stop shop", officials have access to the different programs and subsidies that a beneficiary has and can access, allowing them to provide better social care, as well as increasing the efficiency of public spending. The program is growing to incorporate a new module for employment and employability support and as a basis for supporting the design of local offices, which will provide an integrated delivery of services to children and their families.
• Comprehensive early childhood development projects in El Salvador will benefit more than 230,000 children and their families with quality education and care and improved learning environments. These education and health projects have technical and financial support from the World Bank, including loans for $500 million, are part of the national policy to support early childhood development "Crecer Juntos" (Growing Together), and will help promote quality health for all children ages 0 to 7 and their mothers.
• In Guyana, 55 percent of the World Bank’s US$157.9 million project portfolio is in the education sector where teaching practices have improved – 22 percent of teachers (up from 7 percent) now meet the standard for student-centered teaching practices (as measured by classroom observation tool Teach at Grade 1 and 2) – and, where 1000 additional places are now available for students at the Westminster Secondary School, which was completed on July 19, 2021. The increased placement contributed to meeting the target of 94 percent enrollment in Regions 3 and 4. Further, textbooks and tablets are being distributed to schools and 20 classrooms are being outfitted as full smart classrooms. At the post-secondary level, a new Technical and Vocational Education and Training policy is being developed and, a new medical faculty at the University of Guyana is expected by 2025.
• A US$300 million loan to reduce dropout rates in secondary and higher education in Argentina. The project supports the national scholarship program, which currently reaches 1.4 million vulnerable young people to mentor and encourage them to complete their studies.
• In Haiti, the transport sector represents the largest segment of the World Bank´s portfolio, accounting for 27.5 percent of the total financing estimated at US$1.2449 billion as of March 2023. Projects in this sector have helped the government achieve key milestones following the 2021 earthquake. These include the construction of a temporary bridge over the Grand’Anse River, which was completed in less than a year, allowing safe and resilient connectivity for more than 200 000 people, and the cleaning and rehabilitation of more than 100 kilometers of roads. Overall, the transport projects helped stabilize key road sections, totaling more than 350 km of roads. The projects also reconstructed numerous bridges, using resilient methods; rehabilitated and reinforced 210 small bridges and culverts; strengthened and repaired more than 28 large engineering structures and procured 18 emergency bridges to improve Haiti’s capacity to quickly respond to and rebound from future emergencies.
• Costa Rica became the first country in Latin America and the Caribbean to receive payments from a World Bank trust fund to reduce carbon emissions from deforestation and forest degradation (REDD+). The Forest Carbon Partnership Facility (FCPF) paid Costa Rica US$ 16.4 million for reducing 3.28 million tons of carbon emissions during 2018 and 2019. The payment is the first of three under the country's Emission Reduction Payment Agreement with the FCPF. The country is on track to unlock up to US$60 million for reducing up to 12 million tons of CO2 emissions by the end of 2025.
• The US$100 million in financing support for Barbados focuses on green and blue resilient development, including a new law on water reuse, the adoption of a climate change and agriculture policy, marine pollution reduction, and natural resources management in the context of climate vulnerability; as well as facilitating Barbados’ low carbon and resilient infrastructure development through the implementation of new standards for agency-level disaster management plans, institutional reviews of national emergency management agencies, and increased renewable energy capacity and support for climate change adaptation and mitigation efforts.
• A new US$750 million loan to support reforms in Peru to strengthen fiscal resilience and efficiency, foster a more inclusive and competitive financial sector, and promote greener production. A new Peru Country Partnership Framework supports three high-level outcomes focused on increasing access to quality economic opportunities for workers and entrepreneurs; improving access to quality public services; and promoting increased resilience to shocks.
• The Rural Competitiveness Project in Honduras has helped increase the productivity, competitiveness and business linkages of 12,800 small rural producers. It has benefited more than 14,000 families, including more than 4,000 headed by women and more than 5,000 are indigenous families. Every US$1 invested as part of a productive alliance has leveraged $1.5 from private financial institutions (around US$12.5 million in total), increasing the financial inclusion and creditworthiness of small farmers.
• The Government of Panama, with support from the World Bank, through a Development Policy Loan with Catastrophe Deferred Drawdown Option, has made significant progress on increasing the resilience and reducing the vulnerability of people and their livelihoods, territories, businesses, public services, and public finances, with a focus on vulnerable groups and a gender-inclusive and sensitive vision. The National Disaster Risk Management Policy and its Strategic Plan place Panama at the forefront of countries that have developed a framework for public policy linking disaster risk management to sustainable development. The World Bank has accompanied the Ministry in implementing and updating a Strategic Framework for Disaster Risk Financial Management and its respective Operational Plan. In this framework, emergency response protocols were developed for the City Metro in the country, which benefits more than 200,000 people who travel on the Metro in an average day. The Emergency Response Protocols were developed amidst a larger project to increase the government's fiscal resilience and capacity to mobilize resources in the after a disaster.
• Two loans totaling US$830 million for Colombia to promote an equitable, green, and sustainable economic recovery and support the government's efforts to improve learning in Colombia's education sector.
• Two loans totaling US$1 billion to support reforms in Colombia. The first to boost productivity and accelerate Colombia's economic recovery from the pandemic crisis, and the second to support the government's strategy for the social and economic integration of Venezuelan migrants in the country. In addition, a third US$300 million CAT-DDO was approved to support improved disaster risk management for adverse natural events, including health emergencies.
• The US$250 million Recovering Learning Losses From COVID-19 Pandemic in Brazil Project will support the Brazil´s strategy to promote learning recovery and address school dropout rates related to the health emergency crisis, by implementing innovative programs and systems to strengthen education management in primary and lower secondary schools in the North and Northeast regions of the country.
• The US$1 billion Brazil: Income Support for the Poor affected by COVID-19 Project supported the scaling-up of the Bolsa Família program, financing transfers to more than 3 million families newly added to the program during the pandemic.
• The Rural Alliances Project (PAR), in its different phases supports producers’ organizations in rural areas of Bolivia to establish alliances aimed at improving their production capacity, competitiveness, and access to markets. PAR I and PAR II, supported more than 107,000 small producers’ families and financed 2.601 sub projects, including productive infrastructure and investment in equipment for automated irrigation, among others. PAR III will benefit at least 1,000 rural community associations seeking to reduce vulnerability to acute and chronic food insecurity. Additionally, some 1,270 rural producer organizations will form productive alliances to facilitate their participation in value chains with commercial partners and access to technical assistance providers to achieve improved, more equitable access to markets, technologies, and organizational skills. The financing will contribute to increase food security, market access and the adoption of climate-smart agricultural practices in the country, fostering greater women participation.
• The Urban Resilience Project supports the cities of La Paz and Santa Cruz de la Sierra, Bolivia in reducing vulnerabilities to climate risks and improving the living conditions of more than 167,000 residents of the lower-income areas in these municipalities. The project contemplates the construction of infrastructure resistant to hydrometeorological phenomena such as landslides and floods, including improved drainage channels and river channeling works. Likewise, work will be done to improve neighborhoods and public spaces and to promote sustainable urban mobility.
• Examples of support already in place regionally include the Pacific Alliance's catastrophic earthquake bonds, as well as risk sharing among countries through instruments such as the Caribbean Catastrophic Risk Insurance Facility (CCRIF), which can provide readily accessible funds for recovery after a disaster strikes a member country.

Analytical work:

The World Bank´s cutting-edge analytical work in the Latin America and Caribbean region focuses on supporting countries’ policy design and Bank operations. It is anchored on core data, services, and regional priorities. Topics include drivers of growth and productivity, whole of economy and welfare, green fiscal policy, climate change, migration, and human capital accumulation, among others.

• An ambitious Roadmap for Climate Action in Latin America and the Caribbean, shows country-level diagnostics to support climate and development goals. Peru and Argentina have already published their Country Climate and Development Reports and nine others are on the way including Honduras. Brazil, Dominican Republic and the Eastern Caribbean.

Last Updated: Apr 04, 2023