The World Bank in Latin America and the Caribbean

Latin America and the Caribbean is a region full of opportunities, with endless stories of strength and creativity, a region that does not stand still, that transforms itself to face adversities. The World Bank works with governments, the private sector, and civil society for education, inclusion, and resilience in the face of climate change to end poverty on a livable planet.

The region has made slow but steady progress in overcoming the imbalances created by the pandemic, including rising inflation pressures, global economic uncertainty, and higher debt; even poverty and employment have returned to pre-pandemic levels.

Despite fully recovering the GDP lost after the pandemic shock, economic growth is again lagging behind all other regions of the world, with regional average growth projected at 1.6% in 2024. The region will continue to be impacted by the adverse effects being experienced at the global level, such as lower commodity prices, high-interest rates in the Group of Seven (G7) countries, and China and Europe's shaky recovery.

Losses in household income caused by the pandemic have not fully recovered, especially for the middle class. The average poverty rate now stands above pre-pandemic levels at 30.3 %. And inequality, as measured by the Gini coefficient, has declined slightly in most countries, although largely due to falling incomes among the top quintiles of the income distribution.

Most countries, with a few exceptions, show improvements in the reduction of inflation.  It is estimated that average regional inflation is 3.5 %, below the 5.7 % of the Organisation for Economic Co-operation and Development (OECD).

Overall, employment has returned to 2019 levels, including for women, but real wages remain stagnant and often below 2019 levels. Less educated workers and older adults are lagging the furthest behind in the recovery, while informality has remained mostly stable since 2019.

In order to curb the rise in inflation and improve productivity and employment, the region needs to be more competitive. Competition can drive national manufacturers to adopt new products and technologies, thereby improving companies’ productivity. Global market integration has helped to create more competitive environments, which has facilitated the dissemination and adoption of innovations that improve efficiency. At the same time, competing in dynamic and demanding national markets is the best way for companies to prepare themselves for export.

In education, the losses caused by the pandemic have had a significant impact on learning levels, plunging the region into its worst crisis in 100 years. According to the latest PISA results, three out of four 15-year-olds are below basic in mathematics and one out of two is below basic in reading. On average, 15-year-old students in the region are 5 years behind the average student in OECD countries. Catching up is complex but possible, so it needs to be addressed immediately.

The region is currently experiencing the worst migration crisis in its history. In addition to the traditional flows from Central America and Mexico to the United States, Venezuela and Haiti have experienced significant outflows of persons. More than 7.5 million Venezuelans have left their country since 2015, while 1.7 million Haitians are abroad, adding to the two million internally displaced.

This situation is exacerbated by the increasingly devastating 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, by 2025, 17 million people could be forced to flee their homes. Moreover, nearly 5.8 million Latin Americans and Caribbean people could fall into extreme poverty by 2030 due to the impact of climate change, especially because of a lack of potable water and increased exposure to excessive heat and flooding.

The pandemic accelerated digitalization, but the full potential of the region's wiring for growth, inclusion, and service delivery remains untapped. Progress has been made in expanding basic mobile Internet connectivity, with a coverage gap of only 7 % of the population, while two-thirds of households have fixed Internet connections. Even so, the low quality of services remains a major problem and disparities persist, with 74 % of urban households having access to fixed Internet, but only 42 % of those in rural areas.

Last Updated: Apr 10, 2024

The World Bank seeks to boost sustainable, resilient, and inclusive growth in Latin America and the Caribbean, protect and enhance human capital, foster higher productivity, help countries adapt to climate change and mitigate its impacts, and take advantage of new opportunities in green industries. It also promotes an inclusive recovery by attracting investment, fostering job creation, and interacting with traditionally excluded groups, such as indigenous peoples, Afro-descendants, and people with disabilities.

Supporting countries to achieve their development objectives

The World Bank's analytical work and advisory service focuses on supporting the Bank's policy design and operations in individual countries based on the region's core data, services, and priorities. Topics include drivers of growth and productivity, the economy in general and welfare, green fiscal policy, climate change, migration, and human capital accumulation, among others.

Some recent contributions:

The report “Learning can’t wait: Lessons for Latin America and the Caribbean from PISA 2022”, produced jointly with the Inter-American Development Bank (IDB), analyzes how to address the learning crisis affecting adolescents in the region, and highlights three priority policies to be implemented immediately in order to tackle one of the greatest educational crises in the region in the last 100 years.

The ambitious Roadmap for Climate Action shows a set of country-level diagnostics to support climate and development goals. Peru, Argentina, Brazil, Honduras, and Colombia have already published their Climate and Development Reports, while nine other countries are in the process, including the Dominican Republic and the Eastern Caribbean.

In the 2023 version of Health at a Glance: Latin America and the Caribbean, we analyze the climate resilience of health systems in the countries of the region based on the essential components of health systems proposed by the World Health Organization (WHO).

The report Afro-descendant Inclusion in Education calls for recognizing and addressing the factors that cause and perpetuate exclusion, starting with discrimination in the classroom, one of the first forms faced by thousands of Afro-descendant children in the region.

The My Education, Our Future campaign reiterates our commitment to strengthening and recovering basic learning skills, such as literacy, mathematics, and socioemotional competencies, in addition to ongoing teacher training.

The World Bank also advises countries on how to promote inclusion and gender equality:

In Mexico, policy measures have been proposed to improve women's labor force participation and reduce teenage pregnancies, especially among the most vulnerable groups.

In Chile, an integrated case management platform was launched to strengthen the governance of institutions assisting survivors of gender-based violence, facilitating timely responses and case follow-up to avoid delays and repeated reports.

Partnerships

The World Bank and the Inter-American Development Bank also embarked on an innovative partnership to foster better results for the inhabitants of Latin America and the Caribbean. The aim is to strengthen collaboration in order to help combat poverty, create jobs, and address climate change. In principle, both organizations will work in three priority areas:

• In the Amazon, they will combine their experience to support countries in their transition toward net zero deforestation, help their inhabitants, mostly indigenous peoples to improve their livelihoods while preserving the ecosystem, through innovative financial instruments.
• In the Caribbean, the collaboration will focus on supporting the management of disaster risks and climate crises, as well as developing mechanisms for financial protection against disasters.
• They will also promote digital development in the region, by collaborating to drive digital infrastructure and connectivity to accelerate socioeconomic development. Through the Connected Schools for All initiative, the World Bank and IDB will develop plans to bridge the digital divide in education, ensuring that young people have the skills needed for the economy of the future.

Last Updated: Apr 10, 2024

In fiscal year 2023, which ended in June 2023, the World Bank approved USD 10 billion in financing for Latin America and the Caribbean, including USD 9.8 billion in IBRD commitments and USD 181 million in IDA commitments. It also signed four reimbursable advisory services agreements with four countries for a total of USD 2 million.

Some of the recent results supported financially by the World Bank include:

• A USD 500 million project that will expand sustainability-linked finance and strengthen the private sector's ability to access carbon credit markets in Brazil. In partnership with Banco do Brasil, one of Latin America's largest financial institutions, the project will, for the first time, adopt a sustainability-linked lending approach to help Brazil meet its climate goals.

• The Urban Resilience Project, in Bolivia, helps the cities of La Paz and Santa Cruz de la Sierra to reduce vulnerabilities to climate risks and to improve the living conditions of over 167,000 residents of the lowest income area in these municipalities.

• Chile received the first World Bank loan, globally, to promote green hydrogen and support climate change mitigation efforts. The project seeks to incentivize investment in green hydrogen projects in Chile, which will accelerate the country's green growth, facilitate its energy transition, and support its commitment to carbon neutrality by 2050. The loan will be used to establish a fund for mixed public-private financing of green hydrogen projects and develop risk mitigation instruments that improve financing conditions. In addition, technical assistance will be provided to promote the development of this industry.

• A historic USD 1 billion in financing for Colombia through the Green and Equitable Recovery Policy Financing Program aims to support policies that seek to reduce income and gender inequalities and promote a path toward sustainable growth. It involves a greater emphasis on biodiversity protection and the consolidation of a low-carbon energy transition.

• The USD 100 million financial assistance for Barbados focuses on the resilient development of green and blue economies. It includes a new law on water reuse, the adoption of a climate change and agriculture policy, the reduction of marine pollution, and the management of natural resources in the context of climate vulnerability. In addition, it focuses on the development of resilient and low-emission infrastructure 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.

• Costa Rica has become 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 USD 16.4 million for a 3.28 million ton reduction in 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 USD 60 million for the reduction of up to 12 million tons of CO2 emissions by the end of 2025.

• The World Bank responded quickly to the disaster caused by tropical storms Eta and Iota in Honduras and worked with the Government to help with the country’s rehabilitation and resilient reconstruction. As a result, the project was able to finance the costs for responding to the immediate emergency needs, thereby benefitting approximately 300,000 persons (about 60,000 families). In addition, the building of 18 schools was completed under resilient building standards, and benefitted approximately 117,000 persons. 

• In Guyana, 48 % of the World Bank's USD 134.42 million project portfolio corresponds to the education sector, where teaching practices have improved. Twenty-two percent of teachers now meet the standard of student-centered teaching practices, up from 7 %  previously. The target of 94 % secondary enrollment in Regions 3 and 4 has been met with the completion of Westminster and Good Hope High Schools, which have added a total of 1,800 seats. In addition, textbooks have been distributed, with over 80 % of students in grades 7-9 receiving a set of core textbooks. In addition, 50 classrooms will receive tablets and 20 are being equipped as fully smart classrooms. At the post-secondary level, a technical and vocational education and training policy is being developed, and a new building for the Faculty of Health Sciences at the University of Guyana is expected by 2025.

• In Argentina, a US$400 million project will focus on expanding access to clean energy and promoting energy efficiency in homes and vulnerable communities.

• A new USD 750 million loan strengthens resilience and fiscal efficiency reforms in Peru. It will also foster a more inclusive and competitive financial sector and promote greener production. The new Peru 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 greater resilience to climate and economic shocks.

• The Progestão Program in Brazil is available to all Brazilian states, regardless of their fiscal situation. It currently supports five states in three different regions of the country, for a total of USD 220 million. This program seeks to help Brazilian states improve their long-term fiscal sustainability, implement administrative reforms, improve asset management, and rationalize public spending.

• In Ecuador, the project to Promote Access to Financing for Productive Purposes for Small and Medium-Sized Enterprises (MSMEs), whose objective is to promote reactivation and economic recovery from the effects of the COVID-19 pandemic, has enabled 5,000 MSMEs to gain access to financing. Of these, 42 % obtained credit for the first time, and approximately 50 % belong to or are headed by women.

• The Strengthening the Social Protection and Inclusion System in Panama project provided economic support to poor households affected by the COVID-19 pandemic. A total of 171,339 beneficiaries received conditional cash transfers from the Ministry of Social Development with financial support under the operation. Sixty-four percent of the beneficiaries were women. This project also supported improvements in the income-generating capacity of the poor and vulnerable population by strengthening the Territorial Networks and Social Cohesion Programs, which benefited 5,848 households.

• In Haiti, the Sustainable Rural and Small Towns Water and Sanitation Project helped to increase access to potable water for more than 565,000 persons in rural areas and small towns by building, rehabilitating, and expanding the potable water supply systems. It also provided over 31,000 persons with access to improved sanitation facilities. Through the World Bank’s response to the earthquake of August 2021, the National Directorate for Drinking Water and Sanitation [Direction Nationale de l’Eau Potable et de l’Assainissement DINEPA] also benefitted from the project through the provision of financial support for the rehabilitation of 12 piped water systems and 8 water points.

Last Updated: Apr 10, 2024