RESULTS IN THE LATIN AMERICA & CARIBBEAN REGION 2018 Volume 12 Habitantes de Limón, Costa Rica. Photo: Jessica Belmont / World Bank Collection RESULTS IN THE LATIN AMERICA & CARIBBEAN REGION Printed in: Washington, D.C., by The World Bank Group Produced by: The Latin America and Caribbean Regional Operations Services Unit in collaboration with the Latin America and Caribbean External Communications Unit Editor: Anjali Kishore Shahani Moreno Design: Miguel Barreto Cover photo: World Bank Photo Collection Inner cover photo: World Bank Photo Collection Country data: World Development Indicators / World DataBank 2016/2017 October 2018 TABLE OF CONTENTS i Foreword ARGENTINA 1 Boosting inclusive long-term growth in Argentina BRAZIL 11 An Adjusting Partnership: World Bank Group Support to Brazil, 2011–2018 CHILE 27 Promoting Equity Improvement, Public Sector Modernization, and Sustainable Investment in Chile COLOMBIA 37 Promoting fiscal sustainability, inclusive growth, territorial development and the construction of peace in Colombia DOMINICAN REPUBLIC 47 Contributing to sustainable and inclusive growth in the Dominican Republic PAGE V EL SALVADOR 57 Promoting Inclusive Growth in El Salvador: Improving social outcomes for vulnerable groups HAITI 67 Providing opportunities for all Haitians: strengthening the foundation for long-term development, poverty reduction, and resilience MEXICO 79 Increasing social prosperity and promoting inclusive and sustainable growth in Mexico PANAMA 87 Strengthening Shared Prosperity in Panama: Fostering inclusive growth and better opportunities for the marginalized and vulnerable PARAGUAY 95 Promoting Inclusive and Sustainable Growth and Improving Water, Road, and Energy Infrastructure in Paraguay URUGUAY 103 Becoming resilient: Strengthening Uruguay’s fiscal management and investment in human capital to tackle challenges posed by an uncertain future PAGE VI OECS 113 Transitioning Toward a Blue Economy in Grenada and Other Eastern Caribbean States 121 Developing a Cost-Effective Strategy for Disaster Risk Financing to Increase Fiscal Resilience in the OECS Countries 129l Promoting Evidence-Based Policies for Inclusive Growth in OECS Countries PAGE VII PAGE VIII FOREWORD The Latin America and the Caribbean region is growing again after a number of difficult years. However, the recovery is fragile and the prospects for 2018 are falling short of initial expectations due to challenges faced by some of the countries in our region, particularly in South America. These challenges highlight the need to focus on supporting faster and more equitable growth to make sure that the profound social transformation the region experienced during the first decade of the century is protected and expanded. During that time, the commodity boom fueled strong and widespread growth, cutting poverty rates in half. However, the pace of poverty reduction and growth of the middle class has stalled since then. Fortunately, the gains have not been reversed, but many people remain vulnerable to slipping back into poverty. PAGE IX The Bank’s priorities in the region center on supporting inclusive growth through higher productivity and competitiveness, with an emphasis on investing in education, health, and other aspects of human capital. The Bank also invested in infrastructure and worked to improve countries’ abilities to manage and withstand shocks—such as natural disasters, economic upheaval, and crime and violence—while promoting greater transparency and accountability. In addition, the World Bank prioritized the inclusion of groups that have traditionally faced exclusion, including Indigenous Peoples, women and rural communities. Whenever possible, the Bank supported activities and interventions that attracted private investment because countries’ needs often exceed public resources. This book presents a sample of some of our work in the region which exemplifies our commitment to these goals. Our long-standing relationship with Mexico focuses on unleashing productivity, increasing social prosperity, strengthening public finances and government efficiency, and promoting green and inclusive growth. With World Bank assistance, more than 3 million new clients were brought into the formal financial sector and 1.8 million hectares brought under conservation or sustainable management practices since 2011. PAGE X In Brazil, the World Bank provides technical and financial support for the flagship Bolsa Família Program, which provides conditional cash transfers to 13.4 million families, a major portion of the country’s low-income population. Natural disasters, including hurricanes and earthquakes, are a constant threat, making a focus on resilience essential for the Caribbean countries that remain highly vulnerable to extreme weather events that are intensifying due to climate change. Countries need to be prepared to not allow hard won gains to be swept away within hours. Our work includes analytical and policy support on fiscal and financial sector resilience building and human capital development in several countries including Guyana, Jamaica, the Dominican Republic and Grenada. In the Eastern Caribbean, resilience-building initiatives extend to supporting the region for fiscal sustainability while transitioning to the Blue Economy. In addition, a regional Oceanscape engagement is strengthening capacities for management and governance of valuable ocean resources for the long-term health of coastal and marine ecosystems. Our programs in El Salvador and Panama focus on improving the quality of life of vulnerable groups to build up the human capital so vital for future development. PAGE XI These are just a few of the examples of our deep engagement in Latin America and the Caribbean. We look forward to continued cooperation with the countries of the region and development partners to support the over-arching goals of reducing poverty and spreading both shared prosperity and opportunities for all. Jorge Familiar Regional Vice President Latin America and Caribbean Region World Bank Group PAGE XII Malargüe, Argentina. Photo: World Bank Collection ARGENTINA BOOSTING INCLUSIVE LONG-TERM GROWTH IN ARGENTINA After the severe economic crisis at the turn of the century, Argentina took measures to reduce inequality and poverty. Today 26 percent of the population lives in poverty, the majority in the north of the country and in Greater Buenos Aires. In response, the Argentine government pursues four strategic priorities for growth: poverty eradication, economic reforms to boost productivity long term, improved governance, and global integration. Population: 44,271,041 GDP (billions): US$637.590 GNI per capita: US$13,040 IBRD/IDA lending commitments approved in FY18: 1.00 billion New and supplemental Projects approved in FY18: 4 PAGE 1 CHALLENGE outpacing the reduction regionwide (5 percent), Argentina is richly endowed with natural and the process has since stalled. This is largely due human capital. The country has vast energy to the lack of job creation in Argentina in recent resources, and it is one of the largest agricultural years. Growth has also come at the expense of the producers in the world. Social indicators are mostly environment: Between 2001 and 2014, the country good, despite persisting widespread inequality. lost 12 percent of its forests, double the world average. A relatively well-educated A history of high macroeconomic and political population and long- volatility, poor infrastructure, low competition, a standing excellency in myriad of regulations, and limited fiscal space have research and innovation resulted in low investment rates and constrained inclusive and sustainable growth. A successful renders the country a transition toward a more competitive and open potential destination economy depends on the nation’s ability to for high value-added create quality jobs while protecting the poor and vulnerable. industries. APPROACH Nonetheless, average long-run economic growth The World Bank has increased its support for in Argentina has been only 2.7 percent—about half fostering private investment and maximizing its that of the region’s high-performing countries and financing for development impact. In particular, less than a third that of emerging countries in Asia. the policy dialogue on long-term productivity Furthermore, 25 percent of Argentina’s population growth has expanded, with a notable increase in lives in poverty, and an additional 20 percent analytical and technical assistance in the areas of is considered vulnerable to falling into poverty. trade and competitiveness, promotion of public- Although inequality as measured by the Gini Index private partnerships investment for infrastructure decreased over 20 percent between 2004 and 2013, projects, and financial sector reform. Moreover, PAGE 2 the Bank’s convening power has positioned these Provincial Maternal-Child Health Project analytical efforts as key inputs for country dialogue Since 2004, the World Bank has supported through strategic dissemination and partnerships. Programa Sumar, formerly the Plan Nacer Operational work translates these ideas into Project, a public health insurance program from practice, with the IFC and World Bank together the Ministry of Health that initially provided health boosting investment in renewable energy through services to 96 percent of women and children two guarantees, totaling US$730 million, that without formal health insurance before expanding have mobilized prospective private investment of to cover all women and men up to 64 years of age. up to US$5 billion. At the same time, support for the foundations of macroeconomic stability and Large health improvements have been achieved for strengthening social safety nets for the most under this program: vulnerable continue to be the core of the Bank • The percentage of newborns weighing more program. than 2,500 grams rose from 47 to 92.6 percent. RESULTS • The percentage of pregnant women having their In its 2015–2018 Country Partnership Strategy first prenatal care visit before week 13 rose from (CPS) for Argentina, the Bank focused on financing 15 to 45 percent. activities that directly support the most vulnerable • The percentage of eligible youths between 10 at the household level. It also renewed its presence and 19 years of age receiving complete health in traditionally important sectors, including check-ups according to protocol rose from 15 health, social protection, infrastructure, and rural percent to 38 percent. development, while innovating in others, including housing finance and urban slum upgrade. The • The percentage of children under one year of specific projects and results below represent a few age up to date with all consultations increased of these efforts. from 12 to 62 percent. An impact evaluation of this project showed that Villa 31, Buenos Aires Photo: IADB babies born to mothers attending healthcare PAGE 3 centers registered in Plan Nacer were 7 percent less approximately 300,000 currently receiving a likely to be born underweight. This effect is even Family Allowance (FA) benefit. This achievement greater for babies born to mothers registered in the was twice as large as originally envisioned and was plan, with a 19 percent reduction in the probability accomplished in half the expected time. of underweight births. Moreover, babies born to beneficiary mothers are 74 percent less likely to AUH, jointly with the contributory FA program, are suffer neonatal death. Another analytical study run by ANSES, a decentralized government social carried out by the World Bank with the support of insurance agency. While AUH covers the 3.9 million the national and provincial governments focused on children of unemployed and informally employed testing whether increased financial incentives over parents, the contributory FA program pays four a fixed period improved the quality of prenatal care million child benefits to formal wage-earners and in the short-term and whether the impact persisted the self-employed. over time. The main findings show that the rate of early initiation of prenatal care was 34 percent higher in the group receiving incentives than in the AUH has become control group and that the effect persisted for more the cornerstone of than 12 months after the incentives ended. Argentina’s social safety Children and Youth Protection Project net; a crucial instrument Since its launch in 2009, the Bank has supported for cushioning the effects the Universal Child Allowance Program (AUH), a of unemployment and cash transfer program providing social protection informality, it provides coverage to children under 18 years of age in the most vulnerable households in exchange automatic income for compliance with health and education stabilization in times of co-responsibilities. An ongoing Bank-financed need. project, launched in 2016, included nearly one million children in the eligibility process, with PAGE 4 Water and Sanitation Plan Belgrano WORLD BANK GROUP CONTRIBUTION This project supports the Ministry of the Interior World Bank Group lending in Argentina has in increasing access to safe drinking water and grown significantly over the past few years, sanitation services for 450,000 people in the in response to a rising demand for the Bank’s northern provinces, where almost half of the global knowledge, convening power, technical population lives in poverty. Nearly 15 percent of the assistance, and operational support. At the population in the project’s target area lack a piped end of June 2018, the International Bank for water supply, and 61 percent of the population lacks Reconstruction and Development (IBRD) portfolio access to sewerage. The project has helped finance in Argentina consisted of 25 projects, including the construction of two water supply systems for 23 investment loans, one guarantee, and two trust rural communities in the province of Chaco, where fund grants, for a total commitment of US$7.1 about 50,000 people live, including Qom and Wichi billion. Operations cover a wide range of sectors, indigenous communities. In addition, a wastewater including environmental, infrastructure, transport, collection and treatment plant completed in 2018 agriculture, water, governance, human capital, is expected to benefit 400,000 neighbors of the social protection, macroeconomic stability, and metropolitan area of Resistencia, Chaco. productivity. Buenos Aires. Photo: World Bank Collection PAGE 5 Under the 2015–2018 Country Partnership resources, IBRD prepared a Country Environmental Strategy, analytical and technical assistance work Analysis that identified and quantified the major increased significantly. The Bank has delivered environmental challenges and produced a report on several large analytical pieces, which served as agricultural competitiveness and agriculture risk background for reform design and implementation. management. The Bank provided analytics on capital markets, infrastructure, and housing finance; agglomeration In the field of access and quality of infrastructure economies; select areas related to fiscal policy, and and services, IBRD produced a study on improving Argentina’s integration into the global economy, service delivery patterns and efficiency of water, among others. sanitation, and electricity in ten provinces of northern Argentina. In the health and education In line with the sectors, the Bank carried out a health sustainability study, an impact evaluation of different initiatives Argentine government’s within the SUMAR program, and an analysis on the commitment to good optimization of providing health coverage under the governance and anti- Programa de Atención Médica Integral as well as an corruption, IBRD impact evaluation of the education system in two provinces under a Reimbursable Advisory Services engaged with local arrangement. counterparts to study the state of transparency in The portfolio of the International Finance Corporation (IFC) expanded significantly to Argentina and supported catalyze private sector investments, in parallel implementation of the with substantial direct new investments in private reform agenda. sector–led projects and businesses, including telecom, agribusiness, transportation, and energy. Also, in line with the objective of reducing By July 2018, IFC’s committed portfolio in environmental risks and safeguarding natural Argentina reached approximately US$2.8 billion, PAGE 6 including US$1.5 billion mobilized in third-party organizations, such as the Chamber of Commerce investment. and Services and the Development Bank of Latin America, as well as with local NGOs, such as Poder After a fifteen-year hiatus, the Multilateral Ciudadano, think tanks like CIPPEC (Centro de Investment Guarantee Agency (MIGA) reinitiated Implementación de Políticas Públicas para la dialogue with Argentina, closing its first Political Equidad y el Crecimiento), and policy networks Risk Insurance transaction in June 2017. The such as RAP (Red de Acción Politica), which share US$250 million guarantee provided to Banco the visions emerging from the Bank’s analytical Santander is intended to boost local lending work and help disseminate messages to key to Argentina’s private sector. MIGA has since audiences. increased its portfolio in the country to $1.4 billion. MOVING FORWARD PARTNERS The World Bank supports Argentina on its path As Argentina has become an international leader toward improved macroeconomic stability and in global economic reintegration over the past more open, outward-oriented development several years, it has heightened its engagement by fostering private investment to facilitate with several World Bank partner institutions. The employment growth while protecting the nation’s Bank has worked closely with the Organisation for most vulnerable populations. Reinforcing social Economic Co-operation and Development programs and increasing access to quality services and the G20 Secretariat, contributing technical will be key to enhancing equity of opportunities. inputs to lead international policy dialogues and At the same time, protecting the environment and support Argentina’s leadership role in these fora. harnessing the value of nature for development At the same time, the Bank’s increased analytical constitute important pillars of climate-smart work has attracted the interest of other partner growth. institutions in disseminating knowledge. A systematic country diagnostic now being The Bank’s convening power has fostered finalized will identify the most critical factors Argentina’s partnerships with many international constraining or driving the country’s growth, PAGE 7 inclusiveness, and sustainability. In the short term, I developed high blood pressure, I was referred to a new country partnership framework for 2019 Perrando Hospital. My daughter, Eugenia, was to 2022 will contribute to efforts to address these born prematurely but she was very healthy.” constraints and help sustainably eradicate poverty and increase the welfare of the bottom 40 percent. The “Qom Culture Route,” an initiative designed as part of the Indigenous People’s Plan under the Norte Grande Road and Water Infrastructure BENEFICIARIES Projects, aims to promote Provincial Route 3 and Analia, 21, a native of Chaco Province, benefited its surroundings in the province of Chaco as a from Plan Nacer, a public health insurance tourist and cultural corridor centered on valuing program that has significantly improved health the Qom indigenous culture and women’s economic indicators for the nation’s women and children. empowerment. Beneficiarie Analia. Photo: World Bank Beneficiarie Amancia Silvestre. Photo: World Bank “Since I was pregnant, I have been going to the “This is something new for us. We had no idea Villa Libertad Health center. The attention I about tourism before this initiative. Now we are received was always very good. I would come in meeting people from other countries that barely the mornings, and I would see the doctor. [When] PAGE 8 speak Spanish and come here to see what we are doing. It is a bit difficult for us to talk to them, because we mainly speak our Toba language. This experience has been very enriching for women. We now want to know about our rights, and we feel proud that we can do something linked to our cultural values,” said Amancia Silvestre, one of the Qom women participating in the initiative. Livia Oviedo lives in Villa 31, one of the oldest and largest slums in the city of Buenos Aires. With support from the World Bank, the Buenos Aires city government developed a Comprehensive Urbanization Plan to provide the slum’s inhabitants with a better quality of life. The project supports street paving, new sewerage networks, and connections to the electricity grid, street lighting, and the drinking water supply for all households. “My house had no ventilation and a dangerous Beneficiarie Livia Oviedo. Photo: World Bank electrical installation. Thanks to the renovation works, now I can say that I have a decent home. I am very happy with my new kitchen and bathroom. I think it will change my lifestyle,” notes Livia. PAGE 9 Plan Nacer. Photo: World Bank Collection PAGE 10 BRAZIL AN ADJUSTING PARTNERSHIP: WORLD BANK GROUP SUPPORT TO BRAZIL, 2011–2018 Over the past decade Brazil experienced an unprecedented reduction in poverty and inequality. A favorable external environment, credit-fueled consumption, an expanding labor force, and an expansion of social programs contributed to fast economic and social progress between 2001 and 2015, when 24.2 million Brazilians escaped poverty. Brazil also experienced a rapid decline in inequality over the past decade, with the Gini coefficient of household incomes falling from 0.59 to 0.51. Population: 209,288,278 GDP (triillions): US$2.05 GNI per capita: US$8,580 IBRD/IDA lending commitments approved in FY18: 425 million New and supplemental Projects approved in FY18: 3 PAGE 11 CHALLENGE millions of Brazilians to sanitation services are Brazil is the largest country in the Latin America just a few symptoms of state failures that require and the Caribbean region (8.52 million square fundamental changes in governance. kilometers), with a gross national income per capita of US$14,810 and a population of 207 APPROACH million (2016). Over the past four years, structural During the four fiscal years 2012 to 2015, constraints on growth have become binding. Brazil was one of the largest borrowers from Previous fiscal expansion during the Golden the World Bank Group, with a total of US$17.5 Decade, together with the far-reaching Lava Jato billion invested. After 2015, with the onset of the corruption scandal, have undermined investor economic crisis, and given limited fiscal space confidence, and the resulting deep recession made for new investments, International Bank for it clear that Brazil could not sustain its past social Reconstruction and Development (IBRD) lending gains without changes to its growth model. has declined to around US$500 million per annum, and the program has shifted instead to Recent analysis shows that Brazil faces three building the knowledge foundations for supporting core challenges. The first is the large fiscal adjustments in Brazil’s growth model and the disequilibrium that has developed since 2012 WBG’s engagement to support it. The International and that now poses an imminent threat to the Finance Corporation (IFC) has continued to invest resumption of growth and the maintenance around US$1.5 billion per year, although with a of macroeconomic stability. The second is the shifting profile of clients. absence of sustained productivity growth, putting future increases in per capita incomes at risk The Bank has been at the forefront of supporting due to a projected reduction in the growth of the Brazil’s efforts toward reducing poverty and country’s labor force. The third challenge is the inequalities. As such, Country Partnership Strategy government’s increasing struggles to deliver basic for the fiscal years 2012 to 2017 was designed services, despite its large economic footprint. to support Brazil’s efforts to eradicate poverty A growing violence epidemic, stagnation in and to become a more prosperous and inclusive education outcomes, and failure to connect country. It aimed to do so by supporting activities PAGE 12 to achieve four strategic objectives: (i) increased It had become clear that the unsustainable nature efficiency of public and private investments; of public spending commitments in the face of low (ii) improved quality and expansion of public growth and public sector inefficiencies created huge services for low-income households; (iii) expanded fiscal pressures that put macroeconomic stability regional economic development; and (iv) enhanced at risk. It had also become clear that Brazil needed sustainable natural resource management and to improve the way public resources are allocated climate resilience. The focus on eliminating poverty and overcome vested interests working against rent and promoting shared prosperity and inclusion reduction, to combine public transfers to the poor was accomplished through both the content of with stronger incentives for private investment, operations and an effective shift of operations to and to harness the power of market competition to poorer regions, especially in the Northeast and encourage innovation. remote regions in the Northwest of the country. Furthermore, Brazil has been at the forefront of In this context, the Country Partnership Framework trying new, innovative approaches and sharing for fiscal years 2018 to 2023 was designed to these innovations and experiences through a Bank- focus on three areas: (i) fiscal consolidation and supported South-South learning and exchange government effectiveness; (ii) private sector program. investment and productivity growth; and (iii) inclusive and sustainable development. The The challenges exposed partnership focuses in particular on leveraging private sector investment, improving the efficiency with the onset of the crisis and targeting of public spending, and realizing in 2015 informed the Brazil’s green growth potential. Innovation remains readjustment and design at the heart of partnership, through a combination of the new program for of new and traditional financial support instruments, analytical work, and advocacy. The Brazil. analytical work especially has shifted toward addressing Brazil’s structural constraints through work on fiscal policy, including taxes, pensions, PAGE 13 payroll, subsidies, fiscal rules, and the subnational increase Caixa’s internal capacity to implement debt crisis; on the growth and productivity agenda, the Project, support the startup costs of the EE including trade and competition, technology and Facility, and help develop a pipeline of high-quality innovation, infrastructure financing, infrastructure subprojects, thereby reducing the transactions’ gaps, and the quality of human capital; and on technical and financial risk. reforming the state to address inefficiencies in service delivery. The project’s innovative structure will help leverage US$400 million in commercial financing with a On the investment financing side, the shift in combination of a US$200 million contingent IBRD approach is well illustrated by the Financial loan and US$200 million in lending from the Green Instruments for Brazil Energy Efficient Cities Carbon Fund. In doing so, it will not only achieve Project (Finbrazeec), approved by the Board of important EE and carbon emission reduction School director Elizete Viana, from Tocantins, Northern Brazil. Photo: Photo: Juliana Braga / World Bank Directors in June 2018. The development objective benefits, it will also present to the market one of of this project is to unlock private financing for the first viable project finance structures as Brazil urban energy efficiency (EE) projects in Brazil by steps away from the predominant public funding reducing the credit risk and enhancing the technical model for infrastructure. The project, expected quality of efficient street lighting (ESL) subprojects to generate 100 percent climate co-benefits, will and industrial energy efficiency (IEE) subprojects. help create new asset classes for EE investments The Project will create an innovative EE Facility and help Brazil achieve its Nationally Determined for ESL and IEE subprojects, comprised of a loan Contributions (NDC) targets. In addition, the syndication among Caixa Economica Federal Global Infrastructure Facility (GIF) will support (Caixa) and commercial lenders and a Guarantee Caixa, IFC, and the World Bank in identifying and Facility (GF) to be established by Caixa to provide structuring concessions at the municipal level that liquidity and backstop credit risk for commercial will benefit from the Caixa financing. lenders. A technical assistance component will PAGE 14 On the analytical and advocacy side, the shift in Nacional) did a series of four in-depth reports approach is well illustrated by the Brazil Public of about five minutes each, airing on different Expenditure Review (BER). The BER, entitled “A nights and covering different parts of the report Fair Adjustment: Efficiency and Equity of Public (pensions, civil servants’ wages, social programs, Spending in Brazil,” was requested by the Brazilian and education). government with the objective of conducting an in-depth analysis of government spending and developing options for Brazil to reduce its fiscal RESULTS deficit to a sustainable level while consolidating the social gains achieved over the previous decades. The quality of education The report was launched at the Ministry of Finance improved and public- on November 21, 2017, in the presence of the Minister of Finance and the Minister of Planning. service provision for low- income households was The main finding is that some government extended. programs benefit the rich more than the poor, in addition failing to achieve their goals effectively. Activities under this area focused on supporting As a result, it would be possible to save part of the improvements in the government’s poverty budget without reducing access to or the quality of eradication programs; on improving the quality of public services that benefit the poorest sections of early childhood development (ECD) services for the population. The report raised an unprecedented the lowest income quartiles; on improving learning level of debate about the quality of public spending outcomes and completion rates in primary and in Brazil. During the period from November 21 secondary education; and on improving access to to December 18, 2017, approximately 600 stories quality primary health care and the development of on the report were published and the report itself integrated health networks. Additionally, activities reached all types of media—television, radio, strongly promoted support for active gender printed and online—in Brazil’s five regions. The policies. main prime time evening news (TV Globo’s Jornal PAGE 15 • The flagship Bolsa Família Program, which and evaluation systems, and bolstering the included technical and financial support program’s basic operations. Moreover, the from the World Bank, is cited as one of the Brazil experience in fighting extreme poverty central factors behind the positive social has become an example for other countries, outcomes achieved by Brazil in recent years. and the WBG partnered Brazil, the United In September 2017, the program reached 13.4 Nations Development Programme, and a local million families (more than 50 million people), think tank, Instituto de Pesquisa Econômica a major portion of the country’s low-income Aplicada (Institute of Applied Economic population. Poor families with children receive Research) in disseminating the country’s an average of R$70.00 (approximately US$17) experience through the “World Without in direct transfers. In return, they commit to Poverty” learning initiative. keeping their children in school and taking • Operations in Recife, Ceara, and Acre them for regular health checks. Monitoring supported the expansion and improvement of showed school attendance reached 88.6 ECD service delivery. Specifically, in Recife, percent of children and adolescents aged 6 to the Bank worked with the municipality to 15 and 78.7 percent of 16- and 17-year-olds. Of build new facilities in poor and underserved beneficiaries aged 6 to 15 and aged 16 and 17, neighborhoods for children aged six months 95.4 percent and 92.7 percent, respectively, to five years and to rehabilitate many of attended school above the minimum required. the existing ECD facilities. In Ceara, the Health monitoring reached 73 percent of Bank supported training for municipal ECD families in December 2016, and currently 99.7 coordinators and school principals through percent of the pregnant women monitored an innovative program placing strong focus and receiving benefits under the program are on results-based management and pedagogy. up-to-date with their prenatal care, while 99.1 In addition, the Bank also supported the percent of beneficiary children monitored have development and evaluation of a home-based been vaccinated on schedule. The WBG made training pilot program (Programa de Apoio ao significant contributions to improving targeting Desenvolvimento Infantil), which trains parents mechanisms, strengthening monitoring and caregivers in providing better cognitive PAGE 16 and noncognitive stimulation to children under schools. The state networks of both states had five years of age. In Acre, the WBG supported the nation’s largest increases in IDEB in upper the Asinhas da Floresta program, expanding secondary education between 2009 and 2013. coverage of ECD home-based programs for • As of December 2014, 48.2 percent of the children from newborn to 3 years of age to population in municipalities with more than approximately 3,000 children living in isolated 100,000 inhabitants were covered by the areas. Family Health Strategy and benefiting from • The World Bank supported several innovative PROSEF. Bank interventions supported education programs with promising results. In the expansion of family health care both Pernambuco and Recife, the Bank supported at the federal level and through state-level students enrolled in programs sponsored by interventions in Acre, Bahia, Rio Grande do the Ayrton Senna Foundation and Roberto Norte, and Parana. Additionally, IFC supported Marinho Foundation, helping them to catch Rede D’Or, the largest private hospital network up and reintegrate into the school system at in Brazil, and Allier, a diagnostic imaging the correct age-grade level. The Bank also industry, in expanding affordable, high-quality supported the extension of the school day health care services to low-income populations in Pernambuco and Piaui. The provision of and underserved regions. full-time school in upper secondary education in Pernambuco contributed to reducing Efficiency of public and private investments dropout rates and was a factor behind the increased. Activities under this area focused on recent progress made by the state on IDEB promoting greater adoption of medium-term fiscal (Brazil’s national education assessment tool, frameworks in states and municipalities, as well as which measures both learning outcomes and achieving increased result orientation in planning, internal efficiency). Pernambuco and Rio de budgeting, and expenditure in states. They also Janeiro also benefited from WBG support in focused on strengthening institutional framework implementing a monitoring and evaluation for public-private partnerships (PPPs) and on program that increased accountability and contributing to the policy dialogue on productivity allowed customized support for individual issues. PAGE 17 • The WBG strengthened the capacity of the • Results-based management (RBM) reforms federal government; the states of Minas proved to be more robust than efforts to Gerais, Sao Paulo, and Bahia State; and the improve fiscal planning, particularly when municipality of Rio de Janeiro to prepare and implemented in select sectors, such as manage PPP project pipelines through lending education, health and security. A results operations and Reimbursable Advisory Services orientation has been implemented in Manaus (RAS). In the municipality of Rio de Janeiro, and Acre since 2013; Ceara has received procedures for technical analysis of PPPs were TA in these areas since 2012, and RBM was established, and a PPP project pipeline was implemented there in 2017 and 2018. Minas created. In Sao Paulo, a Multilateral Investment Gerais partially reversed some of its RBM Guarantee Agency (MIGA) guarantee coupled reforms after the 2014 election, but maintained with an IBRD loan attracted private financing them in education, health, and security. Bahia, for the state highway rehabilitation program. Pernambuco, and Rio de Janeiro continue with This project could become a model for crowding RBM in the education and security sectors. in more private capital in the transport sector The RBM model implemented in Minas Gerais in the future. quickly disseminated and demand for support is strong and sustained. Regional economic development increased access to infrastructure services. Activities under this area focused on increasing remote areas’ access to quality infrastructure, such as water supply, waste water treatment, transport infrastructure, and energy in an effort to reduce inequality between and within regions. • The “Light for All” program (Luz para Todos, LpT), delivered more than 562,832 new Telesferico from Rio de Janeiro in Alemao complex. Photo: World Bank electricity connections, mainly in the North and PAGE 18 Northeast, between January 2010 and February • World Bank–financed projects adopted an 2014. The target of reducing the number of integrated approach in which water resources households without access to electricity by management, water security infrastructure, 500,000 was exceeded by more than 10 percent. efficient water use, and expansion of water Quality of access and sustainability remain and sanitation services were combined. This challenges, however, particularly in poor integrated approach provided the tools and (Northeast) and low density (Amazon) regions, mechanisms to better address water challenges, requiring focus on improving both quality of combining institutional development, service and sustainability. investments in infrastructure, and improved climate forecasting to respond to the impact • WBG support was critical in developing of climate change. Bank support helped both transport and logistics planning at the national and state governments improve subnational level. World Bank contributions response, reconstruction, and resilience in came mainly through technical assistance climate monitoring and forecasting, water components in a series of transport multisector allocation and planning, and preparedness for operations in Parana, Rio Grande do Sul, Sao extreme events, such as droughts and floods. Paulo, and Tocantins. The water projects in the states of Pernambuco, Sergipe, Espírito Santo, and São Paulo illustrate Performance-based that integrated approach, as does the federal management contracts Interáguas technical assistance loan. were introduced in Sustainable natural resource management several states, and WBG and climate resilience improved. Activities support facilitated under this area focused on improving water preparation of a pipeline resources management and developing innovative irrigation approaches; improving market access of transport projects at for and adopting climate-smart agriculture (CSA) the subnational level. by small rural producer organizations; expanding PAGE 19 areas under effective environmental protection; farms’ agriculture practices and consequently improving institutional capacity for environmental reduce the pressure on native forests. To management; upscaling the Cadastro Ambiental increase the rate of adoption, the WBG Rural; and improving disaster preparedness as well supported training and technical assistance on as the coordination of post-disaster response in low carbon agriculture technologies for small- states and municipalities. and mid-sized farms in the Cerrado region. Over 14,000 small producer organizations were • The Bank portfolio supported the federal supported by Bank-financed projects in eleven government and the states of Rio Grande states. do Sul, São Paulo, Espírito Santo, Bahia, Sergipe, Pernambuco, and Ceará in improving • The total area under protection (including water resources management. At the federal existing protected areas under improved level, the Interáguas Project supported the management and newly created protected government in improving the coordination and areas) increased by 31.24 million hectares, strengthening the capacity among key federal surpassing the target of 15 million. Brazil institutions in the water sector to achieve an has been a world leader in the fight against integrated approach. Through this technical climate change, and the WBG has supported assistance loan, the Bank supported water the government in expanding the areas under sector reforms and institutional strengthening in individual sectors at the national level; a cross-sectoral component focused on improving implementation performance and coordination of sector policies and activities. • By 2015, seven states were implementing programs to promote adoption of climate-smart agriculture by farmers. In 2010 the government of Brazil started offering producers a credit line for adopting CSA technologies to improve their Porto de Manaus, Brasil. Photo: Mariana Kaipper Ceratti / World Bank PAGE 20 effective protection, particularly under the designed, and total IBRD lending (US$9.6 billion) Amazon Region Protected Areas Program surpassed that originally envisioned. As of the (ARPA), which supported the creation of end of June 2018, the Bank’s lending portfolio 26 million hectares of newly created and/or stood at 36 active operations, with a total of $6.58 existing areas with improved management billion in commitments. In fiscal year 2018, six new effectiveness. Attention also shifted to the projects (four financed by IBRD and two financed Cerrado, which became the focus of land-use by GEF/FIP trust funds) were delivered, for a total conversion as protection of the Amazon of $686 million. Furthermore, the Brazil program tightened. includes a robust Advisory Services and Analytics program, through which the WBG has provided the The WBG supported government with timely and valuable knowledge products and policy guidance. The Bank’s analytical implementation of three program has, in many cases, successfully influenced programs specifically the government’s agenda and policies. focused on the Cerrado Biome, which will total IFC’s investment portfolio in Brazil stood at US$3.84 billion as of June 2018, including US$1.10 nearly US$100 million billion from syndications. In fiscal year 2017, IFC in investments between committed US$1.3 billion (including the Global 2010 and 2020 and cover Trade Finance Program), of which US$499 million was in mobilization. Overall key sectors include a total of approximately financial markets, health, education, agribusiness 7 million hectares of and infrastructure. IFC has also provided Brazil’s protected areas. fast-growing private sector with various advisory services, including for PPP projects (airports, roads, health, and education), through a partnership with WORLD BANK GROUP CONTRIBUTION Banco Nacional do Desenvolvimento (BNDES), The Bank support during the previous CPS (fiscal the Brazilian development bank. Such advice has years 2012 to 2017) was largely implemented as PAGE 21 Quilombo Nhunguara, Sao Paulo, Brasil. Photo: World Bank played a crucial role in leveraging private finance balance sheets of World Bank Group entities. and exploring new financial structures in the Brazil gained about $100 million in additional nascent Brazilian project finance market. IBRD lending headroom through an exchange of existing IBRD exposure to Brazil, where MIGA has MIGA processed the São Paulo Sustainable the capacity to assume higher exposure, for MIGA Transport Project in fiscal year 2015, its first exposure to Panama, a country where IBRD has exposure transaction in Brazil since fiscal year available capacity. 2009. MIGA’s guarantee against non-honoring of sovereign financial obligations mobilized long-term PARTNERS commercial bank financing on competitive terms The WBG continues to expand and broaden its by guaranteeing the state of Sao Paulo’s financial support for Brazil’s South-South Cooperation (SSC) obligations under such bank financing. Brazil was activities. Brazil seeks a growing international also the first IBRD beneficiary of the Bank Group’s role, even if its own spending in this area has effort to take advantage of synergies across the PAGE 22 suffered from fiscal retrenchment recently. It has partnership with Germany, the Netherlands, many public, civil society, private, and academic Norway, the United Kingdom, and the United centers of excellence capable of making significant States in supporting Brazil’s carbon emission SSC contributions. With WBG support, Brazilian reduction targets. The WBG also works with counterparts have been brought together with Kreditanstalt für Wiederaufbau and the Agence clients in other countries on areas of mutual Française de Développement in municipal finance interest. IFC has supported investments by and infrastructure, and with the UK Prosperity Brazilian companies in other developing countries. Fund in private sector development. Finally, the All SSC initiatives including technical cooperation Bank coordinates with the United Nations on components are developed through the Brazilian issues relating to protection of vulnerable groups, Cooperation Agency. indigenous communities, gender, and violence. The WBG works closely with the IDB and the MOVING FORWARD IMF to support the federal and subnational The World Bank Group has been a valued governments. The Bank works closely with IDB partner for Brazil, providing integrated and often to support fiscal adjustment and strengthen multisector development solutions tailored to the public financial management at the subnational nation’s needs. The Bank has also benefited greatly level. The Bank and the IMF support the federal from Brazil’s unique demands, which required government in complementary areas of public the WBG to adapt and learn and which provided financial management. Building on the newly a broad range of lessons on development for the signed Memorandum of Understanding (MoU) Global Community in areas ranging from poverty between the IBRD and the New Development Bank reduction to social inclusion and environmental (NDB), the WBG will cooperate with the NDB in management. operations of mutual interest, especially financing sustainable infrastructure projects. A World Bank Group Country Partnership Framework (CPF) for fiscal years 2018 to 2023, WBG support coordinates closely with other presented to the Board of Directors in July 2017, development partners. The WBG works in built on the progress and experiences of the PAGE 23 last CPS (fiscal years 2012 to 2017). The new DGM CPF aligns with the objectives of the country’s Anália, Maria do Socorro and Lucely are ready to development strategy as outlined in the Brazil fight for what they believe in. These three women growth strategy presented by the authorities; it is are leaders of indigenous, traditional Brazilian rooted in the findings and recommendations of the communities, and have joined forces to preserve WBG Systematic Country Diagnostic for Brazil, the history of their groups. which contains an analysis of key constraints for inclusive and sustainable growth. The CPF supports Brazil in making further progress on the WBG twin goals of eliminating extreme poverty and boosting shared prosperity through a program focused on creating conditions for faster job growth. The CPF reflects the priorities of the Brazilian authorities and the resources and capacity of the WBG to deliver against these priorities. BENEFICIARIES Leaders of indigenous, traditional Brazilian communities. Photo: World Bank Bolsa Familia Beneficiary Dinalva Pereira de Moura, a mother living in the Varjão favela in the Federal District, has said the program “has been a marvelous thing for me and my family. My children know that when we receive the money, they will have more to eat, and that makes them happier. And they don’t skip school, because they know that the money depends on their going.” PAGE 24 Young dancers at Alemão Complex, Rio de Janeiro. Photo: World Bank PAGE 25 Public school, Chile. Photo: Ministry of Education PAGE 26 CHILE PROMOTING EQUITY IMPROVEMENT, PUBLIC SECTOR MODERNIZATION, AND SUSTAINABLE INVESTMENT IN CHILE The government of Chile designed and implemented structural reforms for a more equal society with quality services and increased productivity. These interventions included (i) assessing potential effects of tax reforms on improving equity; (ii) improving access to and quality of tertiary education and health services; and (iii) strengthening the efficiency of social protection systems. Other reforms from 2011 to 2018 have improved the institutional and regulatory framework of water resources management, concessions, energy, and the environment. Population: 18,054,726 GDP (billions): US$277.07 GNI per capita: US$13,610 IBRD/IDA lending commitments approved in FY18: 50.13 million New and supplemental Projects approved in FY18: 1 PAGE 27 CHALLENGE 2015, the average income of the top decile was Chile, a high-income country, has one of the most nearly 27 times larger than that of the bottom politically stable systems in Latin America, with decile, the largest gap among OECD countries. As a strong institutions and a solid record of economic result of these improvements in shared prosperity, growth during the last three decades. Chile’s the middle class grew from 35 to 50 percent of the economy expanded at 5.1 percent (4.1 per capita) population within a decade. per year on average during that period—achieving by 2015 a 28 percent income convergence to the APPROACH United States, among the highest in the LAC The WBG program for fiscal years 2011 to 2018 region. Sound fiscal and monetary policies and was designed to support Chile’s efforts to boost institutions, combined with strong foundations for economic growth and eliminate extreme poverty. private investment and well-functioning essential The program had three results areas: (i) public markets, have produced this steady average growth sector modernization; (ii) job creation; and (iii) while dampening the volatility associated with improving equity and promoting sustainable commodity exports. Chile became a member of investment. Interventions by the World Bank and the Organisation for Economic Cooperation and the International Finance Corporation (IFC) under Development (OECD) in 2010. the program focused on the areas in which they could provide value-added to design and implement Measured at US$4 per day, moderate poverty in Chile dropped from 20.6 percent to 6.8 percent between 2003 and 2013. Income growth among the bottom 40—the WBG’s institutional measure of shared prosperity—rose at an annualized rate of 5.5 percent between 2003 and 2013, faster than the rate among the general population. Nonetheless, income inequality was persistent over the same period: The Gini coefficient fell only very slightly between 2006 and 2015 (from 0.51 to 0.50). In Santiago de Chile. Photo: World Bank PAGE 28 reforms crucial to increasing shared prosperity effective use of trust funds, anchored the WBG in Chile. The program focused on cutting-edge program in Chile. The knowledge program proved advisory and knowledge services, complemented an effective instrument for Chile’s partnership with with investment lending where the Chilean the WBG by helping to strengthen the strategic government and the Bank considered bundling of policy dialogue and decision-making. The resulting financial and knowledge services appropriate. The knowledge exchange can serve as an example of the program further aimed to respond to a dynamic potential for such programs in advanced countries private sector, devising projects with strong with OECD membership. It was delivered through potential to foster innovation and generate jobs. two main instruments: the Joint Studies Program (JSP) and the stand-alone Reimbursable Advisory The Bank has Services (RAS) program. The World Bank provided 45 advisory and analytical services for fiscal years moved toward more 2011 to 2018, and IFC has built a strong portfolio comprehensive supporting Chile’s dynamic private sector, including involvement using MSMEs, agribusiness, extractives, education, and operations, advisory the financial sector. services, trust funds, In summary, during this period, the WBG and innovative financial supported government efforts to improve equity instruments. by increasing access to and quality of education, social protection, and health services. In addition, it supported public sector modernization efforts As an institution of global knowledge, the WBG focused on improved performance and public program was able to help improve service delivery, financial management, transparency, and allocate reduced public resources efficiently, accountability of public institutions; monitoring promote sustainable natural resource management and evaluation of institutional capacity; and for climate change mitigation, and manage risks efficient use of declining public resources. Finally, from natural disasters. The emphasis in crucial to promote sustainable investments, the WBG reform areas on cutting-edge knowledge, including PAGE 29 and the government jointly worked to strengthen Transparency Portal. Although in the Global regulations on the use of natural resources, Open Data index Chile still ranks relatively particularly water; manage infrastructure; and low (in the 22nd place, and in South America bolster the agro-food industry. it is behind Brazil, Mexico, Colombia and Argentina), y end 2017 this portal processed RESULTS more than 170,000 requests of information per WBG supported the achievement of the following month. results for fiscal years 2011 through 2018: • The Ministry of Finance (MOF) led the efforts The World Bank to enhance and expand the central government supported the initial financial administration system through the design and implementation of the new State stages of the portal’s Financial Management System II (Sistema de implementation Gestión Financiera del Estado II, SIGFE II). through an Institutional A changed management model and simplified Development Fund processes reduced the time needed to aggregate data from 20 to 8 days, thereby strengthening assigned to Chile’s financial management capacity. By the end Council for Transparency. of 2017, 87 percent of central government agencies were using SIGFE II. Implementation was financed from 2009 to 2014 by the • Over the past three years, Chile had made World Bank through the Public Expenditure major strides in the area of Probity and Management Project II. Integrity passing important pieces of legislation in areas, such as conflict of interest, campaign • • Chile started to make improvements in financing, etc. The Bank provided support to the area of Open Data, with support of the the Commission of Experts (led by professor WB, by increasing access to the legislative and Eduardo Engel) that former President Bachelet public sector information through the State created to outline this strategy and that has PAGE 30 Public school in Chile. Photo: Ministry of Education monitored its implementation on a non- • retention rates have increased (74 percent of profitable manner since its adoption. first year undergraduate students remain at the institution in the second year); and the number • Chile has utilized results-based financing in the of full-time-equivalent faculty members holding higher education sector to improve quality and PhDs has increased from 5,109 in 2011 to performance through performance agreements 7,883 in March 2016. The WB supported these with institutions. improvements through the Tertiary Education • As of today, more than 50 percent of students Finance for Results Project III from 2013 to studying for technical and professional degrees 2016. In addition, the education knowledge benefit from a redesigned curriculum; program between the Bank and Chile informed PAGE 31 crucial changes in legislation that improved the social services, including consolidation and accreditation quality assurance system and the streamlining of multiple schemes already accountability of institutions. in place and sharpened eligibility criteria to reduce transaction costs and errors of inclusion • At the government’s request, the Bank assessed and exclusion. In 2015, the government the first order distributional effects of the 2014 created the Social Household Registry (RSH), tax reform on the economy, particularly on combining in a single database information income inequality, by quantifying the potential self-reported by households that had been effects of the reform on the country’s income kept in administrative databases. The RSH distribution profile. The report revealed that was launched in January 2016 with data from the tax reform had a broad impact on equity. 12.3 million people grouped in 4.2 million Taxes paid by the richest one percent of the households, approximately 70 percent of population increased from 2.4 percent to 3.5 the country’s population. The WB provided percent of GDP. technical assistance through four RAS, • One hundred municipalities fully implemented supporting the Ministry of Social Development a financial management system and improved (MOSD) on the conceptual and pilot designs of the quality and timeliness of information. More the System for Social Care, the redesign of the than 45 regional plans were designed, financing social information system, and the design of 250 infrastructure projects (roads, water and expanded flagship program, Chile Grows with sanitation, energy, and ICT) and mobilizing You (Chile Crece Contigo). funds to support 27 productive activities. • The Government improved rural communities’ Approximately 320,000 people benefited access to infrastructure services in selected from improved infrastructure and territorial regions. Between 2006 and 2011, 90 percent planning and implementation of inclusive of population (around 320,000 people) living development programs. in the pilot areas of the regions of Coquimbo, • The Government transformed the Planning Maule, Bio-Bio, Araucania, and Los Lagos Ministry into the Ministry of Social benefited from quality and sustainable energy, Development and improved access to water, and sanitation services. PAGE 32 Chile. Photo: World Bank The World Bank processes in the areas of public works, transport, urban mobility, and innovation in supported the design and Santiago and Concepción; sustainable and implementation of the efficient management of natural resources; and pilot under a Territorial the institutional plan and strategy for water reform led by the Water Directorate. Development Project. The pilot led to the • The Bank also contributed to Chile’s efforts to mitigate global climate change through development of a well- certified carbon emission reductions linked tested mechanism for to the hydropower projects Chile Quilleco delivering infrastructure Hydropower Project, Chile–Chacabuquito to rural areas. Hydro Power Project, and CHILE Hornitos Project (Chacabuquito II) and by providing several grants aimed at developing and implementing instruments for carbon pricing • The knowledge program informed key and green growth. The Bank also supported institutional changes and policy-making the Ministry of Energy in preparing its market PAGE 33 readiness proposal, a national forestry policy, PARTNERS and a climate-change strategy. The Bank has maintained a complementary role with the Inter-American Development Bank in the education sector. Key partners in implementing WORLD BANK GROUP CONTRIBUTION the WBG program include the Controller’s office, During fiscal years 2011 to 2017, WB lending the Agencia de Cooperación Internacional totaled $311 million, of which $211 million was for (International Cooperation Agency), Corporación investment projects, including those for the health Nacional Forestal (National Forestry Corporation), ($80 million) and education ($50 million) sectors and the Ministry of Finance, among others. approved by the World Bank’s Board in fiscal years 2017 and 2018, respectively, and US$100 million for Development Policy Financing, approved in MOVING FORWARD fiscal year 2016 to support the government’s policy The WBG will continue to broaden its support, reform agenda to address persistent high rates through a combination of lending and knowledge of inequality through social sector reforms. IFC programs, in response to Chile’s requests regarding has built a strong portfolio that supports Chile’s crucial structural reforms in education, health, dynamic private sector. Over the period of the social protection, and the economic impact of Country Partnership Strategy, IFC made a total aging. Specifically, IFC will continue working in of $1.4 billion in new long-term commitments, financial and sector infrastructure. including $927 million for IFC’s own account and $466 million from third parties. The Knowledge Program delivered 50 products from fiscal year 2011 to fiscal year 2017, including Advisory Services and Analytics (ASA), RAS, and JSP. Currently, the Bank’s trust fund program focuses primarily on the environment and energy sectors through four recipient-executed trust-funded activities (US$17.90 million) and four bank-executed trust- funded activities (US$2.78 million). PAGE 34 Public school in Chile. Photo: Ministry of Education PAGE 35 Growing passion fruit in the township of La Paz, Colombia. Photo: Dominic Chavez / World Bank PAGE 36 COLOMBIA PROMOTING FISCAL SUSTAINABILITY, INCLUSIVE GROWTH, TERRITORIAL DEVELOPMENT AND THE CONSTRUCTION OF PEACE IN COLOMBIA Among other things, the Bank has helped Colombia to reduce vulnerability to disaster risks in major urban areas and to integrate smallholder farmers into modern value chains. Sustained support for the country’s structural economic and fiscal reform efforts has contributed to improved fiscal performance and economic management. Support for the construction and consolidation of peace in Colombia cuts across all areas of World Bank Group engagement and is having demonstrable impacts on those affected and displaced by conflict. Population: 49,065,615 GDP (billions): US$309.19 GNI per capita: US$5,830 IBRD/IDA lending commitments approved in FY18: 541.9 million New and supplemental Projects approved in FY18: 2 PAGE 37 CHALLENGE rural areas. Colombia must broaden its sources Over the last decade, Colombia consolidated its of economic growth in an inclusive and socially, position among the top economic performers fiscally, and environmentally sustainable manner. in Latin America. The country’s sound Boosting productivity and competitiveness in non- macroeconomic management helped sustain extractive sectors will be critical to diversifying the relatively high growth rates, with average annual economy and reducing its vulnerability to external growth of close to 5 percent between 2006 and shocks. 2015. Despite a significant period of trade shock between 2014 and 2016, estimated at nearly 4 Transitioning to sustainable peace is another key percent of GDP, the Colombian economy proved challenge for the nation. resilient, bolstered by the macroeconomic and structural reforms undertaken in recent years. This Decades of armed conflict economic growth and the resulting job creation has been a main driver behind Colombia’s impressive have imposed high strides in poverty reduction. Between 2002 and direct and indirect costs, 2016, extreme poverty was almost halved, from hindering investment in 17.7 percent to 8.5 percent, while moderate poverty fell from 49.7 percent to 28.0 percent. The number physical assets, destroying of poor people in Colombia declined from about human capital, and 20 million to approximately 13.3 million over this creating distortions that period. affect overall productivity. Despite the rapid reduction in poverty, however, APPROACH Colombia’s poverty rate is still higher than the The World Bank Group (WBG) provides integrated Latin American average. It remains one of the most packages of financial, knowledge, and convening unequal countries in the region, which itself is one services from the World Bank, the International of the most unequal regions in the world. Large Finance Corporation (IFC), and the Multilateral historical disparities persist between urban and PAGE 38 Insurance Guarantee Agency (MIGA) to help RESULTS Colombia address its ambitious development agenda. Among the array of instruments, Improving fiscal performance and economic programmatic Development Policy Financing (DPF) management. Over the last decade, the Bank’s has offered timely support for the government’s several DPF operations in Colombia have focused well-defined structural reform agenda, supporting on structural economic and fiscal reforms. such critical reform areas as growth and economic These reforms have supported Colombia in its management, sustainable cities, environment and transformation from a country emerging from climate change, and territorial development. A economic crisis in the early 2000s to one of the top strong program of advisory services and analytics performing economies in the region, with one of is central to the WBG’s engagement in Colombia, fastest poverty reduction rates. Colombia’s fiscal and it includes programmatic knowledge services, performance and international track record on South-South knowledge exchanges, and advisory economic management have improved, helping to services provided on a reimbursable basis. de-risk the country for Foreign Direct Investment (FDI) and capital market participants. Specific Complementing financial services with a range results achieved, stemming directly and indirectly of targeted advisory products to accompany from the reforms, include the following: implementation has proven successful. In some • Tax collections increased from 12.3 percent areas, the Bank engages purely through knowledge of GDP in 2010 to 14.5 percent in 2015, with services, while the country obtains financing proportional reductions in fiscal deficits. elsewhere. The WBG maintains a flexible approach to its engagement, allowing it to respond to • Colombia regained its investment grade rating emerging client demand and priorities. This has in 2011 and was upgraded another notch in been particularly important in the context of a 2013–14. fluid global economic environment and Colombia’s • Between 2004 and 2016, the country has been evolving post-conflict development agenda. a top performer in the World Bank’s Doing Business ratings, consistently making strides in the areas of starting a business, getting credit, PAGE 39 paying taxes, and trading across borders. prioritize actions to decrease their vulnerability, bringing the population at risk down from • Annual FDI more than doubled between 2006 604,000 to 236,972. and 2013, from US$6.8 billion to US$16.2 billion. • Close to 1,100 households living in areas subject to landslides were resettled to safer locations • Between 2006 and 2013, exports grew at an with secure housing tenure. average rate of 15 percent (in nominal US$ terms). • By the project’s close, 18 governmental agencies were incorporated into the Information Reducing vulnerability to disaster risk in System for Disaster Prevention and Emergency urban areas. Between 2006 and 2014, a World Response. Bank project helped Colombia’s largest city, Bogotá, to increase its capacity to manage disaster risks and Linking smallholder farmers to markets. reduce vulnerabilities in key public buildings, such With World Bank support (2002–2015), Colombia as kindergartens, schools, and hospitals. integrated more than 55,000 smallholder producer households into modern value chains, lifting their • Development of risk maps and other studies productivity and sales volumes. enabled the city to identify high-risk areas and • A two-phased Rural Productive Partnerships Project helped to build and promote productive alliances between rural producer organizations and private agribusinesses. • More than 820 successful productive partnerships were established. • By design, the project reached vulnerable groups, such as women, indigenous people, and Afro-Colombians. Close to 10,000 female- TransMilenio buses in Bogotá, Colombia. Photo: Dominic Chavez / World Bank PAGE 40 headed households and more than 9,250 Creating conditions for peace. With World indigenous and Afro-Colombian households Bank support, between 2004 and 2012 the have been assisted, exceeding project targets. Government’s Peace and Development program assisted vulnerable, low-income, and displaced Supporting internally displaced persons populations in rural and urban communities in (IDPs) and the peace-building process. the country’s conflict-affected regions. Premised From 2002 to 2014, the World Bank supported the on the assumption that asset creation can help government of Colombia in its goals related to the mitigate the risk of displacement and that restoring protection, formalization, and restitution of land a basic safety net to displaced families is a vital first rights, particularly for those displaced by decades step in their social and economic stabilization, a of conflict. The Protection of Land and Patrimony wide range of subprojects received support, from of Internally Displaced Persons project built the food security and income generation to social and knowledge base and policy support for a Restitution cultural promotion. Law that provided physical restitution to IDPs of • Of the close to 90,000 beneficiaries, 60 percent their land parcels and for three decrees for ethnic were enrolled in income-generation, social, minorities. cultural, and environmental management • Over its three phases, the project responded subprojects. to 173,756 requests for protection of land • More than 700 subprojects were implemented assets from IDPs, conferred 1,337 titles to by social and community-based organizations, occupants, and received 72,623 requests for and more than 600 organizations benefitted land restitution. from gaining a greater voice in municipal life. • Twenty-four land restitution units were • Project beneficiaries reported having greater established throughout the country. trust in their communities and confidence • More than 109,000 IDPs and more than 8,000 in their public institutions, feeling more ethnic minority community leaders received responsible for their own futures, and being training and information on protection and more empowered to participate in and restitution. influence public affairs. PAGE 41 • Increased trust in and community relations territorial development, and fiscal and growth with public institutions, in turn, boosted productivity. Investment Project Financing enrollment in state social assistance programs. provides support in such areas as water and sanitation, transport, and education. Colombia also has a considerable Trust Fund portfolio WORLD BANK GROUP CONTRIBUTION representing a variety of sectors, including Colombia is the seventh-largest borrower from biodiversity conservation in the Amazon, cattle the International Bank for Reconstruction and ranching, and support for collective reparation to Development (IBRD), per outstanding debt as victims of armed conflict. of July 2017. The active portfolio comprises ten IBRD and two Global Environment Facility (GEF) A Multi-Donor Trust Fund, launched in 2014, projects, totaling $2.8 billion in net commitments. supports peace and post-conflict initiatives. The Development Policy Financing operations are WBG’s sizeable portfolio of advisory services and a feature of the lending portfolio, supporting analytics in Colombia includes a range of activities, sustainable development and sustained growth, from multi-year programmatic engagements to Emma Churio, sits quietly in Guacoche, Colombia. Photo: Dominic Chavez / World Bank PAGE 42 just-in-time analysis to South-South knowledge in ongoing inter-disciplinary activities, ranging exchanges. from the “4G” infrastructure program to mass transit systems in Bogotá to operations under the IFC’s committed own account and syndications Government’s Plan PAZcifico. portfolio in Colombia, as of the end of June 2017, stood at $1.3 billion in 66 projects—the tenth- Traditionally, the IDB and the WBG have largest portfolio worldwide and the third regionally. complemented each other very well in their The top sectors are finance and insurance (58 respective engagements and have maintained a percent), transportation and warehousing (15.7 close dialogue. The Bank also plays an active role percent), collective investment vehicles (10 in the Grupo de Cooperantes, which coordinates percent), and extractives (4.4 percent). IFC the work of the bilateral and multilateral donor Advisory in Colombia is active in public-private community. Two areas in which the donor partnerships (addressing schools, hospitals, and community is particularly active are the post- physical infrastructure), corporate governance, conflict and climate/environment agendas. Within collateral registries, microfinance and sustainable these, the Bank takes the lead on several initiatives energy finance, royalties’ management, sustainable in coordination with interested bilaterals and community investment, investment policy multilaterals, including the UN. promotion, cities, taxes, and green building codes. MIGA’s portfolio of close to $100 million focuses on MOVING FORWARD the financial services sector. In line with the current Country Partnership Framework (CPF), which continues through PARTNERS fiscal year 2021, the WBG expects to maintain a The WBG’s partnership framework with Colombia flexible engagement in Colombia and to continue builds on its convening power and joint work providing integrated packages of financial, with other development partners. Both the knowledge, and convening services from the Bank, Inter-American Development Bank (IDB) and IFC, and MIGA to address the country’s ambitious Corporación Andina de Fomento (the Development development agenda. Informed by a Systematic Bank of Latin America) partner with the WBG Country Diagnostic as well as by consultations PAGE 43 with stakeholders and government, the CPF sets and it was raining heavily, the land from the house out three priorities for engagement: (i) fostering behind fell on top of us and the planks of our house balanced territorial development; (ii) enhancing nearly collapsed under that weight.” social inclusion and mobility through improved service delivery; and (iii) supporting fiscal “I have prospered more since I left the sustainability and productivity. Support for the neighborhood. I have been more enthusiastic about peace building process cuts across all areas of WBG my work in order to progress financially, to have a engagement, from land property rights in rural better life. I am very happy to have been relocated. areas to improving justice service delivery and Absolutely.” access to justice. BENEFICIARIES Nydya García is a member of one of the 1,067 households living in Bogotá’s Nueva Esperanza neighborhood that were resettled to safer locations with secure housing tenure under the World Bank’s Disaster Vulnerability Reduction Project. Speaking of her experience in Nueva Esperanza, Ms. García noted: “When I moved here, there was no electricity, no water, and little by little the area began to be populated. As more houses were built here the land began to become unstable. Every day we had more landslides. Water used to come through my house, through the bedroom, when it rained, as if it were a drainage pipe. Sometimes, when it rained heavily, we would feel scared because we knew that it could cause our house to fall down anytime. Once when we were sleeping PAGE 44 Aldo Jesus Ibarra, stands along the Cesar River in Guacoche, Colombia. Photo: Dominic Chavez / World Bank PAGE 45 Older adults in Dominican Republic. Photo: Dominican Reuplic Presidency PAGE 46 DOMINICAN CONTRIBUTING TO SUSTAINABLE AND INCLUSIVE GROWTH IN THE DOMINICAN REPUBLIC REPUBLIC The World Bank Group has been a key partner in the Dominican Republic’s social and economic development agenda, supporting the country’s efforts to strengthen the quality of basic public services, increase income opportunities, promote social cohesion and resilience among vulnerable groups, and improve resilience to natural disasters, climate- related risks, and health-related emergencies. Population: 10,766,998 GDP (billions): US$75.93 GNI per capita: US$6,630 IBRD/IDA lending commitments approved in FY18: 150 million New and supplemental Projects approved in FY18: 1 PAGE 47 CHALLENGE in the bottom 40 percent grew at an average The Dominican Republic stands out as a fast- annual rate of 4.2 percent, compared to 3.8 percent growing economy that has made significant per year for the top 60 percent, resulting in less progress over the last decade in reducing poverty unequal income distribution. The Gini coefficient and inequality. The country has experienced a decreased by 2 points from 49.6 in 2008 to 47.1 in remarkable period of high and stable economic 2016, below regional inequality levels throughout growth (5.3 percent annually) over the past 25 the period. In addition, the high rates of economic years, making it one of the top performers in Latin growth have been accompanied by improved America and the Caribbean and in the world. access to services. Access to basic education, water, Growth remained high in 2016 and 2017, at 6.6 sanitation, and key assets has improved since the percent and 4.6 percent, respectively, and the early 2000s, decreasing the share of households index of economic activity points to an expansion with deprivations, a proxy for multidimensional of 6.7 percent in the first half of 2018. Moreover, poverty. Despite these positive developments, growth has been relatively stable. however, high inequality and high poverty levels persist, hampering the Dominican Republic’s The Dominican Republic’s aspiration to become a high-income country by 2030. high-growth episode was bolstered by a series of economic reforms APPROACH Against this backdrop, the WBG approach in the implemented in the Dominican Republic has focused on improving the 1990s and 2000s and by quality of basic services: health, education, social favorable geographic protection, and water and sanitation. conditions. The WBG program also seeks to raise income by enhancing competitiveness and diversifying Growth over the period from 2008 to 2016 was exports, deepening the impact of programs slightly pro-poor: Per capita income for individuals PAGE 48 Farmer in Guananico, Dominican Republic. Photo: Dominican Reuplic Presidency in building resilience, and incorporating a more inclusive. The CPS FY15–FY18 Performance focus on productivity and financial inclusion, and Learning Review (PLR), endorsed by the Board including by building greater synergies with in January 2018, extended the CPS period to fiscal International Finance Corporation (IFC) and year 2019 to allow adequate sequencing of the new Multilateral Investment Guarantee Agency Country Partnership Framework (CPF) with the (MIGA) engagements in the energy, financial, electoral cycle of the Dominican Republic’s next and transport sectors. The WBG program focuses elections. The overarching objective of the CPS— on mainstreaming issues related to gender, laying the foundation for inclusive sustainable governance, disaster risk mitigation, and climate growth—remains valid, with a deeper emphasis on adaptation. inclusion and equity. The PLR consolidated the CPS objectives from five Results Areas to three Pillars: The overall strategic goal of the Country (i) strengthening conditions for equitable growth; Partnership Strategy (CPS) for the Dominican (ii) improving service delivery for the poor; and (iii) Republic for fiscal years 2015 to 2018 is to support building resilience. government efforts to sustain growth and make it PAGE 49 RESULTS grants and 10 percent counterpart funds, The development objective (DO) of the 2010–2017 further increasing local ownership. The projects Municipal Development Project to improve the included 39 sidewalks, 20 parks, 13 sports technical and financial capacity of participating areas, 6 cemeteries, 3 funeral homes, 3 fire local governments (PLGs) to program, finance, stations, and one cultural house. and deliver minimum municipality services was • Financial reports from 26 PLGs were prepared achieved. A total of 202,378 individuals, 44 percent in accordance with international standards and of them females, as targeted, benefited from the were transparently published as mandated by works executed under the aegis of this project, the Participatory Municipal Law, exceeding the exceeding the initial target of 194,229. Indirect target of 25. beneficiaries of institutional strengthening activities totaled 266,396 individuals, also exceeding the All results (per the ICR draft dated August 12, target of 194,229. Among the main results achieved 2018) for the Water and Sanitation in Tourist Areas during project implementation were as follows: (approval/closure dates: April 2, 2009/March 31, • All 31 PLGs adopted the Municipal 2018) either met or exceeded targets: Development Plans. • The National Water Sector Council (WSC) was • Eighty-four percent of the PLGs implemented established. Institutional Action Plans with core elements, • A Water and Sanitation Strategy was developed. exceeding both the original and revised targets of 60 percent (appraisal) and 80 percent • Of the 100,000 consumers targeted, 94,000 (restructuring), respectively. (85 percent of the Puerto Plata region) received access to improved or new sanitation and to • Twenty-eight PLGs benefited from works based wastewater treatment and disposal services. on their level of advancement in institutional strengthening, exceeding the target of 25. • Participant regional water utilities strengthened their cadaster, commercial, administrative, • Eighty-five small civil works subprojects were financial, and sewerage systems. completed at project closure, with matching PAGE 50 primary education. In addition, education care centers were evaluated against quality standards and now have fully functional school management committees (Juntas de Centro) to implement their school development plans. Activities to institute robust protocols for data collection and to enhance capacity to produce high- quality data through integrated information systems (with an open data portal through which stakeholders can access timely and relevant data in user-friendly reports), Health program for women, Dominican Republic. Photo: Dominican Reuplic Presidency financed with the grant Strengthening Capacity These efforts consolidated and strengthened the to Produce and Use Quality Education Statistics Dominican Republic’s policy framework for its (approval/closing dates: April 3, 2017/April 7, water and sanitation sector, and access to sanitation 2019), complemented loan efforts. and wastewater treatment and disposal services expanded, boosting performance of participant With completion of the major bidding processes provincial and regional utilities. The participating to rehabilitate circuits, the Distribution Grid water utilities (known as CORAAs), were located Modernization and Loss Reduction (approval/ in the cities of Moca (CORAAMOCA), a densely closing dates: December 15, 2015/December populated city in the Center (Cibao) region, and La 31, 2020) project is well positioned to achieve Romana (COAAROM), a zone on the country’s east its DO of improving the financial viability of the side much visited by tourists. electricity distribution companies by reducing energy losses and increasing revenue collections Through the Support to the National Education in the circuits rehabilitated under the project. Pact Project (approval/closing dates: September Reduced energy loss will help increase the supply 20, 2015/June 30, 2020; project ISR December of electricity (latest ISR dated December 18, 2017), 30, 2017), notable progress has been made on an instrumental result highlighted in the Electricity student learning outcomes for the first cycle of Pact. PAGE 51 One year before closing the Implementing WORLD BANK GROUP CONTRIBUTION Extractive Industries for Transparency Initiative Over the first three years of the CPS for fiscal years (EITI); approval/closing dates: June 8, 2017/ 2015 to 2018 for the Dominican Republic, program June 24, 2019) all results (per draft ISR updated in delivery has been in line with the projected lending December 2017) had been achieved. of US$550 million: Five projects were approved, valued at US$455 million, and two operations, Policy options were totaling an additional US$130 million, are in the pipeline. The current portfolio includes three mainstreamed for investment loans: US$75 million for an integrated enhanced transparency in social protection and promotion program; US$50 the mining sector, led by million to enhance the quality of the education an active and open multi- sector; and US$120 million to rehabilitate and reduce loss in electricity distribution networks. stakeholder engagement. Two budget support operations were approved in the CPS period: US$60 million to strengthen Governance in the sector has improved, its management of public finances, and US$150 potential has been developed, and the regulatory million for a contingent credit line to respond to framework has been updated, including a revised natural disasters or health emergencies (CAT- mining law and a properly implemented EITI. DDO). Grant-funded projects totaling US$10 Relations between stakeholders are stronger, million are a significant part of WBG’s engagement. and trust and confidence improved regarding government oversight of mining revenues. The As of June 2018, IFC’s portfolio had reached grant, through consensus building and enhanced US$527.5 million (including member mobilizations trust, has nurtured a strong sense of ownership by of US$228.73 million) in eight projects supporting the three participants in the mining sector: civil development of a competitive private sector. society organizations (CSOs)s, companies, and IFC’s portfolio has increased by US$235.32 government. million (79 percent) in the last two years. IFC is strategically focused on (i) increasing financial PAGE 52 New school in Santiago, Dominican Republic. Photo: Dominican Reuplic Presidency inclusion and access to finance, particularly in $74 million. The project consists of the design, less developed areas of the country, with a special construction, operation, and maintenance of the focus on MSMEs; (ii) improving competitiveness Santo Domingo to Rincón de Molinillos Highway, and regional integration; and (iii) investing to a 106-kilometer toll road connecting Santo mitigate the effects of climate change. Since its Domingo with the country’s northeastern peninsula incorporation, IFC has carried out more than 45 (Samana). operations with high development impact and with more than 20 clients, in a consolidated amount PARTNERS exceeding US$1.2 billion. As the chair of the Donors Coordination Group in the Dominican Republic, the WBG has helped MIGA has one active project in the Dominican leverage funds, develop partnerships, explore Republic: the Autopista del Nordeste C. Por. A., opportunities for alignment and harmonization, with a guarantee amount at issuance of $107.6 and promote country ownership. Key WBG million and an outstanding guarantee amount of partnerships in the Dominican Republic, including PAGE 53 through trust funds, feature in (i) the education resilient agriculture (scheduled to be negotiated sector, with the European Union (EU) and United October 9, 2018); and one Additional Financing States Agency for International Development project of US$50 million to be added to the (USAID); (ii) public financial management, with existing $50 million Education Project, in support the Inter-American Development Bank, the of the Education Pact and educational quality EU, and the Spanish Agency for International and efficiency. The Bank is conducting a Public Cooperation; (iii) the energy and mining Expenditure Review (PER) of three crucial sectors sectors, with the OPEC Fund for International of the economy: education, health, and electricity. Development, IDB, the European Investment Quality analytical products and structured Bank, and the German Agency for International engagement mechanisms will continue to allow the Development; (iv) the social protection sector, WBG to maintain a robust policy dialogue with the with the IDB and the United Nations Development government, with an enhanced focus on inequality Programme; (v) the agriculture, fishing and and inequity. Lessons, results, and conclusions forestry, and water and sanitation sectors, with from the PLR, the Systematic Country Diagnostic the Food and Agriculture Organization, the Inter- (SCD), and the PER in the remaining CPS period American Institute for Cooperation on Agriculture, will be the basis of renewed dialogue on the next and the French Agency for Development; (vi) law five-year CPF. and justice and public administration, with USAID; and (vii) health services, with the United Nations With strengthened coordination with IFC and Children’s Fund and the Pan-American Health MIGA over the coming period, the WBG will focus Organization. on building scalable programs that can attract additional resources, including from the private sector, while continuing to deepen the focus on MOVING FORWARD mainstreaming gender and governance issues. The WBG program remains relevant to and aligned IBRD and IFC will also explore opportunities with the government’s priorities. Activities in to unlock energy potential derived from the the pipeline include one investment of US$80 Electricity PACT now awaiting signing. IFC will million to promote the integrated management continue its program of credit lines, while looking of natural and water resources and to support PAGE 54 Students in Brisas de Caucedo, Boca Chica, Dominican Republic. Photo: Dominican Reuplic Presidency for opportunities in other sectors, such as clean ISO standard: Improvements in the Program’s energy, and IFC and MIGA both will remain open operating processes contributed to its earning the to opportunities to support foreign investments in gold National Quality Award for three consecutive the financial and infrastructure sectors. years. “We have had the support of the World Bank in BENEFICIARIES Progresando con Solidaridad, both in financing Dr. Altagracia Suriel, Technical Director of the and in technical aspects. It has been important for Vice President’s program Progresando con us to have the World Bank as a strategic partner Solidaridad (Progressing Together), a social for social protection in the Dominican Republic.” protection and promotion effort, noted how she valued WB contributions to the Dominican social protection network. These contributions, she stated, are reflected in the Solidarity Program’s three certifications under the world quality PAGE 55 School orchard in El Salvador. Photo: World Bank collection PAGE 56 EL SALVADOR PROMOTING INCLUSIVE GROWTH IN EL SALVADOR: IMPROVING SOCIAL OUTCOMES FOR VULNERABLE GROUPS El Salvador’s social and economic development agenda has aimed to strengthen the delivery of basic public services, increase income opportunities, particularly for the poor, and promote social cohesion and resilience among vulnerable groups. In addition, El Salvador has worked to strengthen its capacity to manage natural disasters and respond to climate change. Population: 6,377,853 GDP (billions): US$24.80 GNI per capita: US$3,560 IBRD/IDA lending commitments approved in FY12: 140 million New and supplemental Projects approved in FY12: 2 PAGE 57 CHALLENGE Finally, since the end of the Civil War, El Salvador El Salvador is the smallest country in Central has forged ahead in consolidating democracy, with America and one of the most densely populated in six consecutive democratically elected governments the world. Its per capita gross domestic product in and peaceful transitions of power. 2015 was US$8,602 (in purchasing power parity terms), and its population of 6.1 million is largely Despite this progress, poverty remains high. urban (about 66 percent); the country ranks in the Using international poverty and extreme poverty 83rd percentile worldwide for population density. lines of US$4 per day and US$2.5 per day, respectively, 31.4 percent of the Salvadoran Since the end of the Salvadoran Civil War in 1992, population is considered poor (compared to 23.3 the country has advanced on both social and percent in the Latin America region), and 12.3 political fronts. In health, El Salvador has already percent are considered extremely poor (compared achieved the Millennium Development Goal for to 10.8 percent in the Latin America region). reducing child mortality. In addition, the poorest Anemic growth is the main reason for the relative segments of the population have been making stagnation in poverty reduction. With an average increasing use of healthcare facilities, aided in growth rate of 1.5 percent (2001 to 2015). part by a policy of free primary care services. Immunization rates have also increased, from 86 percent in the 1990s to 91 percent in recent years El Salvador stands out (2010 to 2013). Similarly, access to improved as one of the slowest sanitation and water resources increased from growing economies in the 79 percent to 90 percent, and the share of the population with access to improved sanitation Latin America region. expanded from only 56 percent to over 70 percent during the same period. In education, both access El Salvador faces numerous challenges, calling for to education, particularly at the primary level, action on many fronts. Political polarization, high and literacy rates have increased, with the most levels of crime and violence, low levels of savings significant advances occurring in urban areas. and investment, poor educational attainment, lack PAGE 58 of skilled labor, and high rates of migration and remittances —among other factors—prevent the country from growing at a faster pace and reducing poverty and increasing shared prosperity for its citizens. APPROACH In the face of these challenges, the World Bank Group (WBG) has focused on ensuring social inclusion of the vulnerable segments of the population, while building foundations for inclusive growth. The WBG has been a key partner in supporting the country’s efforts to protect vulnerable households and expand effective and well-targeted safety net programs as well as to increase access to basic health and education Education program beneficiaries Carolina Silva, and friend Reina Vides, Ciudad Merliot, El Salvador. Photo: World Bank collection services. Moreover, the World Bank program promotes the creation of safer communities to The International Finance Corporation (IFC) and boost economic development and focuses on the Multilateral Investment Guarantee Agency providing at-risk youth and vulnerable groups (MIGA) complement the Bank’s support by with training, job readiness, and work experience focusing on sectors and areas that contribute to to help build their skills and assist their efforts enhancing the country’s economic growth. IFC is to join the labor market. In addition, the World helping the country improve its investment climate, Bank is helping the country to foster sustainability increase access to finance, and foster regional trade and resilience, particularly by promoting efficient and financial inclusion. MIGA provides guarantees public spending and building government capacity in the manufacturing and financial sector. to manage natural disasters and environmental challenges. PAGE 59 RESULTS • Improving access, retention, and WBG financing helped achieving the following graduation rates for lower and upper results between 2010 and 2016: secondary education. By supporting the adoption of the Inclusive Full Time School • Providing income support and (IFTS) model, the WBG’s Education Quality contributing to the establishment of Improvement Project has helped the country an integrated social protection system. improve access, graduation, and retention rates By supporting the implementation of the for lower and upper secondary education. Temporary Income Support Program (PATI) through the Income Support and Employability Project, the WBG helped channel resources to The IFTS model more than 40,000 beneficiaries (70 percent of addresses the problems whom were women and 30 percent of whom were between the ages of 16 and 24) in poor of quality and exclusion urban areas, preventing them from falling of economically deeper into poverty. The PATI also included disadvantaged students activities to promote opportunities for the urban poor by improving the coverage of labor and tackles problems intermediation, providing skills training, and of early drop out, grade organizing employment fairs, and others. As a repetition, and poor result, one year after the completion of PATI, learning outcomes. participants’ monthly incomes had increased on average by US$18 per month. The WBG also helped improve the government’s institutional The program provides stimulating and capacity through an integrated social protection diverse learning experiences, a safe learning system by supporting the development of EL environment, teaching responsive to the Salvador’s Unified Registration System for social and developmental needs of young social protection programs and its Universal adolescents from diverse backgrounds, and Social Protection System. PAGE 60 school accountability for student results. To date, this WBG-financed project has supported the renovation of 17 schools and 209 school facilities (including classrooms, libraries, study rooms, teacher rooms, and sports and recreation spaces) and has benefited around 40,000 students with new facilities, learning materials, and pedagogical activities. The project also supports the improvement of pedagogical skills, thus far providing Salvador Antonio Castro Moreira, Santiago Texacuangos, El Salvador. approximately 1,997 teachers with a series of Photo: World Bank collection certified trainings. offices have benefited from infrastructure • Expanding health service coverage. With renovation projects; acquisition of medical support from the Strengthening Public Health equipment, medicines, and medical supplies; Care System Project, El Salvador has expanded and procurement of ambulances, among coverage of health services provided by the other initiatives. Moreover, the project has Integrated Health Care Services Network to provided training to about 900 medical staff the country’s 82 poorest municipalities. This on a range of issues including maternal health, Network, critical for delivering high quality reproductive and sexual health, teenage health services, aims to reduce fragmentation, pregnancy, child health, and nutrition, and inefficiencies, and coverage gaps by providing it has promoted compliance with medical health services through three levels of care: waste management systems. Finally, the (i) the primary level, including family and project has proven to be a practical tool for community health units; (ii) the secondary the government, particularly in response to level, including basic and general hospitals; national emergencies, such as the Ebola and and (iii) the third level, including specialized Zika outbreaks. hospitals. To date, a total of 21 hospitals, 52 community health units, and 19 administrative PAGE 61 • Enhancing the capacity of local education and health sectors, totaling US$140 governments to deliver services. WBG million in net commitments. support, through the Local Government Strengthening Project, has helped municipalities develop institutional and This investment portfolio technical capacity to design and implement is complemented by trust subprojects: Thus far around three million funds and analytical people across 262 municipalities have benefited from more than 500 infrastructure projects. and advisory services These projects for electrification, clean focusing on fiscal water and sanitation, waste management, management, capital construction and improvement of roads and financial markets and bridges, and renovation of sports and recreation spaces generated around development, climate 12,000 temporary jobs. Moreover, the WBG change, and disaster risk supported a number of certified training management. programs covering decentralization, fiscal management, and territorial development, IFC facilitates access to credit and improves improving the technical skills of more than finance availability through IFC credit lines tailored 500 local government staff. Finally, the WBG to small entrepreneurs and households. As of supported the implementation of a municipal July 2017, IFC’s investment program was US$160 management information system, contributing million. MIGA has US$129.3 million in gross to enhanced transparency and citizens’ exposure across three projects in the financial and increased access to information. services sectors. WORLD BANK GROUP CONTRIBUTION The World Bank’s current active portfolio in El Salvador includes two investment projects in the PAGE 62 PARTNERS Donor cooperation and partnerships play a fundamental role in achieving development outcomes in El Salvador. To ensure complementarity of its activities, the WBG coordinates efforts closely with the Millennium Challenge Corporation (MCC), the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration, the European Union, the United Nations Development Program, and other bilateral donors, including the Japan International Cooperation Agency (JICA), the German Development Bank (KfW), the German Agency for Technical Cooperation (GIZ), and Spain, among others. For example, MCC is currently expanding the IFTS Model to 80 additional schools in El Salvador’s eastern region, complementing the WBG support for this program. IDB, in addition to IFC, is helping to increase access to finance for micro, small and medium Education program beneficiaries Carolina Silva, and family, enterprises (MSMEs) by providing technical Ciudad Merliot, El Salvador. Photo: World Bank collection assistance, and KfW supports SMEs through special credit lines for renewable energy. MOVING FORWARD The WBG will continue its partnership with El The WBG’s climate change and resilience agenda Salvador in line with the Country Partnership as well receives additional support through close Framework 2016–2019, which focuses on building coordination with other partners, including JICA, the foundations for inclusive growth and fostering GIZ, and IDB. sustainability and resilience. To this end, the PAGE 63 Bank will continue implementing its investment portfolio in the education and health sectors, This financial aid not complementing its support with knowledge only helped secure bus products, advisory services, and technical fares for children in need, assistance focused on youth employability, crime but because the children and violence, financial sector development, fiscal management, and climate change resilience. In no longer had to walk addition, IFC will continue bolstering private alone through dangerous sector development by (i) focusing on measures neighborhoods, it also to improve the investment climate and trade facilitation; (ii) improving infrastructure and helped to improve the renewable energy sources; and (iii) increasing safety of Carolina and access to finance for MSMEs, with particular many other children. emphasis on agribusiness. MIGA will continue to explore opportunities to meet requests from investors. BENEFICIARIES Carolina Silva, a young student from El Salvador’s La Libertad department, is more eager to learn as a result of the financial assistance she received through the Income Support Employability Project. When asked what made a difference, she replied: “The only thing that I needed to have perfect attendance in school was the possibility to afford to pay for the bus fare and not miss a day of school.” PAGE 64 Bakery workshop for school students in El Salvador. Photo: World Bank collection PAGE 65 Haitian girl, Port-au-Prince, Haiti. Photo: United Nations PAGE 66 HAITI PROVIDING OPPORTUNITIES FOR ALL HAITIANS: STRENGTHENING THE FOUNDATION FOR LONG- TERM DEVELOPMENT, POVERTY REDUCTION, AND RESILIENCE Since the 2010 earthquake, US$645 million have been disbursed. These resources have (i) supported recovery and reconstruction; (ii) maintained and improved education and health services; (iii) combated cholera; (iv) strengthened agriculture and improved disaster risk management; (v) increased access to and improved the quality of water in cholera hotspots; and (vi) supported institutional development and the development of data in support of policy improvements. Population: 10,981,229 GDP (billions): US$8.40 GNI per capita: US$760 IBRD/IDA lending commitments approved in FY17: 186.2 million New and supplemental Projects approved in FY17: 8 PAGE 67 CHALLENGE Haiti’s geography, people, and history provide On January 12, 2010, a 7.0 it with many opportunities. A history of vested magnitude earthquake interests, political instability, and natural disasters struck Haiti, killing has prevented Haiti from realizing its potential, an estimated 230,000 however, trapping it in a low equilibrium and rendering it one of the world’s poorest and least people and displacing 1.5 equal countries. Haiti’s growth performance over million. the last four decades has been weak, and poverty remains endemic, with the highest numbers of the It resulted in damages and losses of US$7.9 billion poor living in rural areas. As of 2012, about 60 (120 percent of GDP) and in US$11.9 billion in percent of Haiti’s population of 6.3 million people estimated reconstruction needs. It compounded remain poor, and 24 percent—2.5 million—are Haiti’s many pre-existing development challenges extremely poor. Extreme poverty declined (falling and exacerbated its underlying socioeconomic from 31 percent in 2002) over the last decade, drivers of poverty. Compounding these challenges, however, mostly driven by private transfers and cholera broke out in October 2010. Hurricane external aid. These gains will likely be hard to Matthew hit Haiti at category 4 on October 4, 2016, sustain, as aid flows continue to decline, and leading to about 600 deaths; 2.1 million people growth remains very modest. Improvements in were affected, and considerable damage occurred human development indicators (such as education) on the southern peninsula and in the northwestern were also observed over the same period, sections of the country. Matthew resulted in a 32 thanks to the increased government funding for percent loss in the country’s GDP. reconstruction and the social sectors, but Haiti’s development nonetheless remains severely APPROACH hindered by inequality and highly concentrated Haiti’s persistent challenges as one of the poorest markets, and the contract between the Haitian and most unequal countries in the world and its state and its citizens continues to be persistently high susceptibility to natural disasters have shaped weak. the Bank International Development Association’s PAGE 68 (IDA) framework of support to the country over the last few decades. Specifically, to maximize its impact, IDA support to Haiti has aimed to (i) respond to emergency needs and increase service delivery levels, while (ii) tackling some of the primary institutional and policy issues in sectors critical to laying the foundation for more inclusive, resilient, and sustainable development. From that perspective, IDA supported reconstruction following the 2010 earthquake using tailored Hurricane Matthew destruction in Haiti. Photo: EU Delegation to the Republic of Haiti emergency operations based on grants and a mix infrastructure bottlenecks to market access. IDA of other instruments, such as analytical work and support also focused on building human capital technical assistance (TA) to rebuild infrastructure through increased access to education and health (neighborhood reconstruction, for example) and and controlling cholera. In parallel, to achieve restore or enhance service delivery (particularly in and sustain development outcomes, IDA has the areas of education, disaster risk management been supporting the government through a mix of (DRM), electricity, and cholera eradication) while operations to improve transparency, accountability, continuing to support institutional development and effectiveness in public investment while and policy improvements (particularly in education, strengthening institutional capacity to produce electricity, and health). essential data, manage sectors, and set evidence- based policy priorities and build fiscal The Bank enhanced its support from 2015 to 2017 sustainability. by complementing the reconstruction activities initiated in the prior three years and building resilience through infrastructure, reconstruction, RESULTS and resilience operations and TAs, while catalyzing World Bank support has been pivotal to Haiti inclusive growth by creating jobs and supporting following the 2010 earthquake and has led to the private sector actors as well as removing primary achievement of significant results between 2010 PAGE 69 and 2016. Of particular relevance are the results on the fight against cholera. More than three achieved under basic service delivery programs million people benefited from health and in education and health, with special attention to cholera education and prevention training; closing geographical and income gaps in service more than 600,000 received water treatment delivery and combating cholera through combined products and/or soap; 6,000 received health health and water interventions. These results and hygiene education; and medical personnel include: received professional training. Two hundred cholera treatment centers and oral rehydration • Resumption of education after the earthquake stations received staff and equipment; nearly and increased children’s school enrollment. 60,000 people in southern Haiti benefited from Through grants, more than 2,800 schools improved access to safe drinking water; and the reopened following the 2010 earthquake, and National Directorate of Water and Sanitation tuition waiver and nutrition programs were launched its first sanitation roadmap to raise introduced. From 2012 to 2016, 440,000 awareness and encourage households to build tuition waivers were financed, making it or maintain their own latrines. possible for about 180,000 youth (50 percent of whom were girls) to attend school and for more than 380,000 children (50 percent of whom Significant were girls) attending primary schools to receive achievements were quality hot meals daily. In parallel, government made in infrastructure capacity to improve quality in education has been strengthened and policy development recovery and reduced supported. The tuition waiver mechanisms vulnerability to disasters developed by the Bank have been so successful as well as on housing and effective that they have been adopted by the government and other donors. and neighborhood reconstruction. • Improved access to health and water and sanitation services, with a transversal focus PAGE 70 School in Port-au-Prince, Haiti. Photo: Mary Stokes/ World Bank IDA has also leveraged technology to become more of six antiseismic construction guidelines, and agile in its interventions across sectors and has training for 400 engineers and 15,000 masons been using satellite data and spatial approaches on building safe housing. Moreover, over to monitor the economy. These efforts have 1,000,000 square kilometers of debris were proven very effective when applied to the Bank’s treated, more than 90 kilometers of roads were multihazard mapping efforts, infrastructure and rehabilitated, one bridge was built, and the road roads mapping, connectivity analysis, and similar linking Port-au-Prince to Jacmel was repaired, efforts. Results achieved in these interventions thus restoring access to the capital for half a encompass the following: million Haitians from the country’s southern region. • Reconstruction of infrastructure and enhanced capacity to respond to disasters. Support for • Reconstruction of neighborhoods and post-earthquake reconstruction has included accompanying rapid and unregulated urban the completion of assessments of 450,000 growth. Programs improved infrastructure for buildings for structural damage, elaboration more than 200,000 people in neighborhoods PAGE 71 impacted by the earthquake, including access, took place in 2014, school mapping in 2015, solar street lighting, drainage adjustments, a health center sample assessment in 2015, reinforced embankments, and gathering areas and a public expenditure review in 2015). This for social interaction. More than 50,000 data serves as a basis for policy dialogue on displaced persons returned from camps to sectoral organization, orientation, resource use, safer housing in neighborhoods through and effectiveness. Thanks to IDA support, the relocation grants and rental subsidies, with Haitian government’s basic payment functions over 80 percent of renters remaining in were restored and equipment and capacity their subsidized housing after the subsidy building was provided to several government period expired. Furthermore, more than entities to continue functioning following the 400 community-selected and -implemented earthquake. Furthermore, when developing subprojects addressed gaps in service delivery the Systematic Country Diagnostic and the and infrastructure, helping to improve living Country Partnership Framework, given the conditions for more than 270,000 people importance of citizen engagement in improved in urban areas; these subprojects included quality and effectiveness of service delivery, solar street lamps providing access to lighting citizen inclusion, and a strengthened social for nearly 120,000 people, water treatment contract, extensive wide-ranging consultations and distribution points benefitting 130,000 were held to foster debate and identify issues people, and more than 100 income-generating that may have been overlooked. Beneficiary activities, including for female headed households. • Strengthened efficiency, sustainability, and transparency in public services. As a crosscutting program of the World Bank’s work in Haiti, IDA has been instrumental in supporting institutional development in a broad range of sectors by developing evidence-based data (the first poverty assessment in 12 years Water sanitation program, Haiti. Photo: World Bank PAGE 72 surveys have been integrated into all operations environmental management, infrastructure, and grievance and redress mechanisms, and statistics, tourism, topographic mapping, feedback loops were incorporated in many thematic mapping, and many other areas. project designs. These have proven to be very effective for implementing operations, Despite continuous engagement through several empowering citizens, and fostering social interventions to move reforms forward—using accountability and inclusion. a mix of tools, including investment financing, technical assistance, policy advice, international • Assessment of damage and loss post–Hurricane experience, investments from private investors, and Matthew. Immediately after Hurricane others—IDA has not yet yielded satisfactory results Matthew passed over Haiti, the World Bank on electricity or on public financial management. prepared a damage and loss assessment It has been unable to broker enough momentum (DALA) to determine the hurricane’s impact on for reforms aimed at increasing access and the various aspects of the economy. The DALA strengthening transparency in public investments, became a blueprint used by the government mostly due to lack of political will and strongly to mobilize resources for post-Matthew vested interests. rebuilding. • Implementation and delivery of two critical WORLD BANK GROUP CONTRIBUTION products under the Haiti Disaster Risk The Haiti Urbanization Review was made possible Management program. The Atlas of Hazards by three grants: (i) support from the Global and the open-data platform, HaitiData, Facility for Disaster Reduction and Recovery disseminates, shares, and exploits GIS and (GFDRR); (ii) a grant from the World Bank’s cartographic data about Haiti. This idea was Jobs Umbrella Trust Fund, supported by the born after the earthquake of January 12, 2010. Department for International Development/ The first version of HaitiData has been used UK AID, governments of Norway, Germany, and by several actors and partners involved in risk Austria, Austrian Development Agency, and by and disaster management, urban planning, the Swedish Development Agency SIDA; and (iii) agriculture and food security, spatial planning, a grant from the Innovations in Big Data Analytics PAGE 73 program under the Global Data and Text Analytics In this role, the Bank has led several sectoral donor Operations unit in the Global Themes Vice groups and often supports the leadership of other Presidency of the World Bank. partners through analysis, sectoral dialogue, and alignment of instruments and/or financing where possible, as well as by supporting the government’s PARTNERS efforts to encourage donors to support its The Banks has several development partners objectives. and actors in Haiti. After reaching a peak after the 2010 earthquake of over US$3 billion from Partnerships of particular relevance are those 37 multilateral and bilateral donors, however, with UN agencies, United States Agency for partners’ funding has decreased since 2013. In International Development, the U.S. Centers addition, absence of effective coordination by the for Disease Control, and the French Agency for government, combined with a lack of leadership Development, yielding positive outcomes on health and cohesive decision making, have led to a and education service delivery. Close collaboration plethora of unchecked and unframed initiatives and complementary coordination with the Inter- from donors. This fragmentation has undermined American Development Bank is helping to close the the efficiency and effectiveness of some gaps on education access and quality as well as to interventions, despite their volume and scope, extend water and sanitation service coverage. The especially on service delivery. disaster response agenda is seeing some positive developments thanks to close collaboration with The World Bank has Japan and the United Kingdom. Finally, while continuously worked to significant results have yet to be sustained, Haiti’s achieve harmonization energy reforms are receiving support from multiple donors. and efficiency in funding allocations from its MOVING FORWARD partners. The World Bank Group will continue to support Haiti through its existing program, closely aligned PAGE 74 with government priorities, as expressed in the 2012 Strategic Development Plan for Haiti (PSDH) and the Memorandum of Economic and Financial Policies for 2015–2018, with the goals of maintaining macroeconomic stability while sustainably increasing and improving efficiency in development spending. The World Bank will emphasize helping Haiti to achieve the following three objectives: (i) fostering inclusive growth, through support for development of greater economic opportunities beyond Port au Prince; (ii) Haitian children, Haiti. Photo: United Nations enhancing human capital by supporting poverty dynamic between the state and its citizens to reduction through investments in education and contribute to reducing fragility. IDA, Trust Fund, health; and (iii) strengthening resilience by helping and IFC resources and MIGA guarantees will be Haiti prepare for and prevent natural disasters. To provided. Combined financial and knowledge improve the government’s effectiveness, the World services will be used to implement the program, Bank will support transparency and accountability, including IDA financing, guarantees, analytical including in public financial management, and work, just-in-time advice, short-term technical strengthened institutions and government capacity assistance, IFC investments and advisory services, to produce essential data, manage sectors, and set and investment climate support. evidence-based policy priorities. BENEFICIARIES The World Bank also aims to improve fiscal Joseph Woaly, a young-looking man sitting at a sustainability in the context of rapidly declining desk at the crossroad of several classrooms, has external financing by strengthening fiscal reporting been a censor in the primary school La Ruche and accountability and increasing the capacity to Enchantée overseeing students for more than seven finance basic service delivery. In implementing the years. Small children in pink uniforms, laughing CPF, the WBG also seeks to promote a productive girls with pink ribbons in their dark braided hair, PAGE 75 Teacher Joseph Woaly with his children, Haiti. Photo: World Bank walk by. Joseph’s dream was to have his children “It is my duty to send my children to school,” study in the same school in which he worked Woaly says with a smile, when asked what he because of the school’s good performance. All the would do without the waiver program. He doesn’t kids in the school gradually enrolled under the seem to know how he would pay, but Woaly, who tuition waiver program, including his five children, “completed his primary education at age 17 and his one after the other. His oldest son, Woade, is 10 and secondary education at age 25,” said he was happy wants to be an eye doctor. to see his five children in classes corresponding to their ages, thanks to tuition waivers. PAGE 76 Young Haitians practice basketball, Haiti. Photo: United Nations PAGE 77 Empowering women in Oaxaca, Mexico. Photo: Jessica Belmont / World Bank PAGE 78 MEXICO INCREASING SOCIAL PROSPERITY AND PROMOTING INCLUSIVE AND SUSTAINABLE GROWTH IN MEXICO Building on a long-standing relationship with Mexico, the World Bank Group continues to support the country in addressing its development challenges. The results of the partnership are evident across the four central areas of WBG engagement: unleashing productivity; increasing social prosperity; strengthening public finances and government efficiency; and promoting green and inclusive growth. Population: 129,163,276 GDP (trillions): US$1.15 GNI per capita: US$8,610 IBRD/IDA lending commitments approved in FY17: 350 million New and supplemental Projects approved in FY17: 3 PAGE 79 CHALLENGE Income inequality in the country is high and Mexico has one of the highest per capita incomes stagnant, and poverty is particularly concentrated in Latin America. A member of the Organisation in a few states. In 2014, more than 42.4 percent of for Economic Co-operation and Development the poor were concentrated in just five of Mexico’s and the G20, the country has maintained solid thirty-two states. macroeconomic stability in times of crisis and financial sector resilience. While the Mexican APPROACH economy continues to grow, the external The World Bank Group’s (WBG) Country environment for structural reforms is a challenging Partnership Strategy (CPS) for Mexico aligns fully one, with modest global growth, stagnant trade, with the country’s current National Development and heightened policy uncertainties. A net exporter Plan. The CPS’s flexible design enables the WBG of oil, Mexico’s economy has also been affected by a to adjust and/or deepen areas of engagement sharp drop in the price of oil, falling oil production, in response to emerging government priorities. modest global demand, and international financial Government demand for WBG services and volatility. comparative advantages has converged on the complementarity of WBG financing, provision Moderate economic of cutting-edge global knowledge, and ability growth in Mexico to provide development solutions despite the country’s complex needs. Through its results- over recent years has based thematic engagement program, integrating hampered significant financial, knowledge, and convening services, the poverty reduction and WBG has delivered a package of development solutions tailored to Mexico. improvements in shared prosperity. WBG support for the urban sector exemplifies this approach: An in-depth urbanization review financed by the Bank, followed by Reimbursable Advisory Services (RAS) on options for low-income PAGE 80 improvement over the last 20 years as social spending has expanded and become more progressive. Further declines in social deprivation will remain central to further poverty reduction. RESULTS The following are among the results achieved between 2013 and 2016 through the WBG’s Metrobus in Mexico City. Photo: Isabelle Schaefer / World Bank customized package of financial, knowledge, and housing and urban planning, led to an investment convening services in its four primary areas of operation in the housing sector that expects to engagement: help approximately 30,000 people gain access • Unleashing productivity. The Bank assisted to formal housing. Programmatic analytical and the country in bringing more than three advisory services are a feature of the WBG’s million new clients into the formal financial strategic knowledge program and have proven sector. Of the one million people financially effective in providing a flexible multiannual included under the Technical Assistance framework that integrates several types of support Program for Rural Microfinance project, nearly under one umbrella objective. This approach has 60 percent were women. Moreover, through allowed timely response to medium- and short- advisory services, the Bank supported the term demand. RAS have proven to be particularly implementation of key aspects of Mexico’s effective for collaboration at the subnational level Financial Reform Law, such as the analysis of and remain in great demand at the federal level as competition in financial markets. well. • Increasing social prosperity. The WBG Measures of social deprivation (as quantified supported Mexico’s efforts to develop a more by non-monetary measures of welfare such inclusive, effective, and integrated social as education, water, sanitation, electricity, protection system. The Bank contributed to and housing quality) have shown significant the redesign of the conditional cash transfer PAGE 81 program, relaunched under the name • Promoting green and inclusive growth. PROSPERA, to reflect its additional attention Progress was made in reducing greenhouse gas to access to higher education and formal emissions by promoting low carbon initiatives employment. Positive results in nonmonetary in the transport, housing, solid waste, and dimensions of welfare reflect the significant energy sectors. Four integrated mass transit progress made in the social protection system. corridors, for instance, reduced emissions by Between 2010 and 2014, for instance, lack of 1.43 metric tons of carbon dioxide equivalent access to health care services was reduced from (MtCO2e). Bank support also sponsors 29.2 percent to 18.2 percent. optimal use of natural resources. Through an International Bank for Reconstruction and • Strengthening public finances and government Development (IBRD) loan in forestry, 1.8 efficiency. Bank support can be credited million hectares have been brought under with helping the government of Mexico to conservation or sustainable management manage medium-term fiscal challenges. practices since 2011, and more than 1,000 Playing a key advisory role, the Bank’s Public communities and ejidos now benefit from Expenditure Review provided inputs to National Forestry Commission (CONAFOR) Mexico’s fiscal consolidation program and the programs. With the support of several GEF preparation of the 2016 budget. Bank technical assistance fostered adoption of modern public sector management and information systems, as evidenced in the state of Oaxaca, for instance. Policy-making processes also benefited from WB inputs. A RAS on disaster risk management (DRM) provided recommendations to strengthen Mexico’s DRM structure at the federal and subnational levels, enabling the federal government to promote cost-efficient disaster risk reduction investments to manage disaster risk. Apparel jobs created in Mexico. Photo: Maria Fleischmann / World Bank PAGE 82 grants, the Bank also contributed to bringing 11,861 hectares under enhanced biodiversity A strategically aligned protection and encouraged small and medium- program of advisory sized agribusinesses to adopt environmentally services and analytics sustainable technologies. is an equally important Across all areas of engagement, the Bank’s WBG contribution, concerted attention to gender issues has had a providing timely inputs demonstrable impact. Between fiscal years 2014 in such critical areas as and 2016, all of Mexico’s newly approved projects incorporated gender considerations in at least one climate change, urban of the three dimensions of analysis, action, and development, water, and monitoring and evaluation. transport, among others. WORLD BANK GROUP CONTRIBUTION IFC’s committed portfolio in Mexico as of the end of Mexico is IBRD’s third-largest borrower, with June 2017 was $1.29 billion own account plus $1.04 outstanding debt of $14.8 billion as of the end of billion in mobilization in 77 active projects. It is June 2017. The Bank’s active portfolio focuses IFC’s sixth-largest portfolio worldwide and second support on social protection and education regionally. In terms of commitments (including programs, green and inclusive growth agendas mobilization), the top sector is chemicals (27 (energy, environment, water, agriculture, and percent), followed by ports (23 percent), telecom transport), and financial inclusion programs. Net (9 percent), construction materials (9 percent), commitments at the end of June 2017 total $2.5 oil and gas (9 percent), agribusiness and forestry billion. In addition, the Bank manages a wide (7 percent), financial markets (7 percent), funds grant portfolio of approximately $274 million (3 percent), health and education (1 percent), and that supports activities primarily in the areas of others (5 percent). MIGA currently has no exposure environment and energy. in Mexico. PAGE 83 Such utilization of Management Company, aims to attract commercial risk capital to support Mexico’s reform agenda by the full suite of World “crowding in” equity investors in sectors including Bank Group services infrastructure, oil and gas, manufacturing, and instruments of agribusiness, services, and banking. engagement with the Established in December 2014, the CMF is public and private sectors consistent with IFC’s role in mobilizing capital to exemplifies its relevance support private sector growth in middle-income in upper middle-income countries. IFC has supported new players’ entry into the oil and gas industries via the CMF, for countries like Mexico. example, its $200 million commitment in Citla energy. Combined IBRD-Global Environment More broadly, the WBG remains highly relevant in Facility (GEF) support for Mexico’s energy paving the way for solutions that can be scaled up, sector has resulted in reducing approximately thus creating global public goods in many areas. 9.15 MtCO2e of emissions from 2012 to 2016. The World Bank has facilitated additional GEF grant financing, helping to enhance biodiversity PARTNERS protection, environmentally sustainable The WBG engagement in Mexico is selective technologies, and the reforestation of mangrove by design, focusing on areas aligned with its ecosystems and riparian zones. The World Bank twin goals, with country demand, and with and IFC have collaborated to provide technical WBG’s comparative advantages in the country. assistance to the National Infrastructure Fund Harmonizing efforts with other development (FONADIN) to improve the efficiency of its partners and promoting country ownership are Municipal Solid Waste Program (PRORESOL). core tenets of the WBG’s engagement in Mexico, as is the objective of leveraging funds. Exemplifying the latter, the China-Mexico Fund (CMF), a $1.2 billion private equity fund managed by IFC’s Asset PAGE 84 MOVING FORWARD work,” she says. “We are not just useful for staying The productivity agenda is among the areas for at home or working in the kitchen, but also for which the government has sought deepened WBG doing this kind of work…. Now I have a salary. support. Productivity increase is a government On Sundays, I can tell my children, ‘Let’s not cook imperative across many sectors, including the rural at home today. Let’s go eat out. And I have the economy and the social protection agenda. Other satisfaction of saying, ‘I’ll pay.’” critical areas of increased demand are linked to Mexico’s economic and fiscal management, such as follow-up support to the Public Expenditure Review completed in 2016 and analytical work to support implementation of the new Fiscal Discipline Law for Subnational Entities and related public sector management practices. At the same time, Mexico remains committed to the low-carbon urban development path it has chosen, and it has requested additional support in this area. The Beneficiary Maribel Xochitl Mexico. Photo: World Bank CPS maintained its flexibility to respond to client requests through the elections in 2018, and Policy Notes are being prepared to provide advice to the From Maribel’s own work maintaining the in-coming administration. communally owned forest, to carpentry businesses using the forest’s sustainably harvested lumber, to the operation of an ecotourism lodge, half of BENEFICIARIES the jobs in La Trinidad are now forest-related. All Community-run forest programs in Mexico profits from the forest program return to residents, provide livelihoods and jobs for many people while who decide how best to spend them. Investments supporting climate goals. Take the story of Maribel have included paved roads, a library, and a youth Xochitl, a single mother employed as a forest recreation center. ranger in the mountainous village of La Trinidad, in the state of Oaxaca. “It’s a great opportunity to PAGE 85 Beneficiaries from water project, Panama. Photo: Jessica Belmont / World Bank PAGE 86 PANAMA STRENGTHENING SHARED PROSPERITY IN PANAMA: FOSTERING INCLUSIVE GROWTH AND BETTER OPPORTUNITIES FOR THE MARGINALIZED AND VULNERABLE Panama’s economic and social development agenda has aimed to maintain its macroeconomic sustainability and enhance its productive capacity to reduce poverty and income inequality. Panama has also worked to upgrade the quality of life of its marginalized and vulnerable groups through better access to basic services and resilience in dealing with natural disasters. Population: 4,098,587 GDP (billions): US$61.83 GNI per capita: US$13,100 IBRD/IDA lending commitments approved in FY17: 365 million New and supplemental Projects approved in FY17: 2 PAGE 87 CHALLENGE Panama’s economic growth has been faster than For Panama to maintain that of any other country in the Latin American its level of growth and and Caribbean (LAC) region over recent years, for all Panamanians to averaging 7.2 percent from 2001 to 2013. The benefit from it, economic, country’s rapid growth has translated into significant poverty reduction. Between 2007 and social, and environmental 2012, poverty declined from 39.9 percent of the challenges must be population to 26.2 percent, and extreme poverty addressed. declined from 15.6 percent to 11.3 percent. During the same period, income growth for households These include ensuring a well-educated workforce in the bottom 40 percent of population increased with relevant skills to sustain economic growth, 8.2 percent, compared to the average per capita inclusion of marginalized groups and indigenous income, which grew by 6.6 percent. peoples, adequate and modern infrastructure to support a high-performing economy, strengthened Although growth at the aggregate level has been public sector institutions that promote efficiency largely pro-poor and inequality has declined, and transparency, compliance with international not everyone has shared equally in Panama’s financial standards to maintain investment flows, prosperity. The indigenous peoples living in and sustainable natural resource management and semiautonomous territories (comarcas) and groups resilience to natural disasters. living in remote rural areas suffer from higher poverty levels and significant gaps in access to basic services as compared with the rest of the APPROACH country. For instance, in the poorest comarca with Given Panama’s unique development challenges the largest population, Ngäbe Buglé, poverty rates and the sophistication of its economy, the World reach 93 percent and extreme poverty 83 percent. Bank Group (WBG) has supported the country’s In addition, most of the poor are settled in areas efforts to maintain high growth while ensuring that vulnerable to natural disasters. benefits reach all. The World Bank has been a key PAGE 88 partner on policy reform for fiscal sustainability, the core growth sectors of the economy, centered on enhanced targeting of social protection programs, the Panama Canal, urban transportation, energy, and modernization of the public sector planning trade, and financial services. and budgeting system with enhanced transparency. Moreover, the World Bank program has had a clear RESULTS focus on poverty and shared prosperity, supporting World Bank (IBRD) financing helped achieved the social inclusion by building productive alliances following results from 2008 to 2015: to help increase producer incomes, increasing the percentage of women receiving prenatal care, and Increased income and productive capacity of improving water and sanitation services in rural small-scale producers. Financing and technical and poor communities. In addition to financing, assistance for access to markets was provided to the WBG has provided high-quality technical 152 productive alliances of small-scale producers assistance and cutting-edge knowledge, particularly in high-poverty areas, including indigenous areas. in managing fiscal risks stemming from natural Producers benefited from increased agricultural disasters. WBG engagement in Panama also productivity and a 23 percent increase in sales. includes International Finance Corporation (IFC) Around 4,600 producers (30 percent women) investments and Multilateral Investment Guarantee received investment and technical support through Agency (MIGA) guarantees, which have supported 130 subprojects covering a range of agricultural activities. Improved targeting of social transfer programs and increased social security coverage. By improving the targeting of the Red de Oportunidades program (“Network of Opportunities”), the government channeled resources to the poor in remote geographic areas that had largely been excluded in the past, Yamitzia, beneficiary from water project, Panama. Photo: Jessica Belmont / World Bank increasing coverage in the indigenous comarcas— PAGE 89 from 50 percent in 2008 to 70 percent in 2014— the results were development of the first Disaster such that 46 percent of all beneficiary households Risk Finance and Insurance Framework in Latin were in indigenous comarcas. America and strengthened emergency preparedness and response capacity at the subnational level. Improved households’ access to quality basic health and nutrition services. Under the WORLD BANK GROUP CONTRIBUTION Coverage Extension Strategy, by 2014 mobile health Following a decade of limited engagement, the units had provided regular access to a basic package World Bank Group partnership with Panama was of health services to 149,028 beneficiaries from 47 rejuvenated in 2005. Since then, the World Bank poor rural communities; 86 percent of pregnant has delivered US$1.1 billion, including operations women received at least three prenatal controls addressing education, health, social protection, (compared to 20 percent in 2010), and 96 percent land administration, rural productivity, rural of children under age one received full vaccinations and urban water and sanitation, disaster risk (compared to 26 percent in 2010). management, public sector efficiency, and the environment. Along with financial assistance, Enhanced capacity for disaster risk the Bank has provided high-quality technical management and adaptation to climate assistance and cutting-edge knowledge—in urban change. The Disaster Risk Management planning, urban transport system reform, disaster Development Policy Loan with a Catastrophe Risk risk management, and logistics—to leverage the Deferred Drawdown Option has proven to be a increased economic activity resulting from the quick and flexible instrument for addressing the reversion of the Panama Canal in 1999. IFC and national drought emergency triggered by the El MIGA have provided support for private sector Niño phenomenon (2015–16), including support for investments and employment generation. IFC’s development and implementation of the National investment in Panama grew from nine projects Water Security Plan under the Water Security totaling US$166 million from 2002 to 2006, to High Level Committee. Most World Bank disaster 28 projects representing US$ 1.2 billion gross risk management support was provided through investment from 2007 to 2014. These include technical assistance activities; foremost among support for the Panama Canal Expansion Project PAGE 90 and the Penonomé Windfarm. MIGA’s role has Partnership Framework (CPF), to help reduce been central to improving urban mobility through extreme poverty and promote shared prosperity its guarantee for the Metro Line 1. by supporting the country’s growth while ensuring inclusion and opportunities for marginalized groups and bolstering resilience and sustainability. PARTNERS Several operations have been implemented jointly or in close coordination with other The CPF features a mix donors. This was done successfully with the water program, for example, in part by providing of instruments, drawing a platform for dialogue on policy reform. Both on the strengths of the the Metro Water and Sanitation Project and the WBG institutions to Water Supply and Sanitation in Low Income provide Panama with the Communities Project were coordinated with the Inter-American Development Bank (IDB) and the package of assistance Development Bank of Latin America, covering that will best address its distinct geographic areas. This proved to be a development needs. good model, allowing each multilateral to manage and develop its project activities in its separate Leveraging the comparative advantages of areas. Knowledge services were provided for the the World Bank, IFC, and MIGA will facilitate Public Expenditure and Financial Accountability delivery of a complementary suite of services assessment, conducted jointly with IDB to and partnerships with the private sector. The identify challenges in Panama’s public financial World Bank and IFC already collaborate closely management system. in the energy sector, where the Bank supports sector modernization by eliminating distortions MOVING FORWARD and promoting new legislation to diversify the The WBG will continue its partnership with generation matrix, while IFC invests in renewable Panama, in line with the current Country energy (wind). MIGA will explore guarantees PAGE 91 for energy and other infrastructure investments. During the CPF period, WBG institutions will further explore potential synergies to accelerate progress towards the twin WBG goals for its work with Panama. BENEFICIARIES Hilaria Palacios, the mother of five children, is four months pregnant with her sixth. Previously, Hilaria Water project beneficiary, Panama. Photo: Gerardo Pesantez / World Bank found it difficult to access health services because she had to walk long distances or pay prohibitively “It’s much better than it used to be,” says Bertha de expensive transport costs to reach the local clinic. Vitola, a resident in Colón’s Davis neighborhood. Thanks to community visits by a mobile team of health professionals, including a doctor, a nurse, a “We now have the collection facilities in a central technician, a nutritionist, an environmental health location that provides easy access to all the sanitation specialist, and a driver, health now communities. Now all we have to do is make sure comes to Hilaria. This approach will provide Hilaria we pay our bill on time. We now have water access with monthly access to quality basic health services 24 hours a day, and good water pressure, too.” throughout her pregnancy. Hilaria comments on the difficulty of accessing care prior to the mobile health teams: “I had to walk or take a boat to receive check-ups. It was very difficult.” Today, Hilaria receives care from the mobile health teams: “Here, I receive monthly check-ups from the Doctor.” PAGE 92 Yamitzia, beneficiary from water project, Panama. Photo: Jessica Belmont / World Bank PAGE 93 Girl in Paraguay. Photo: PAHO PAGE 94 PARAGUAY PROMOTING INCLUSIVE AND SUSTAINABLE GROWTH AND IMPROVING WATER, ROAD, AND ENERGY INFRASTRUCTURE IN PARAGUAY Paraguay and the World Bank Group have long been core development partners, with the Bank supporting the country’s National Development Plan (2013–2030) prioritizing eradication of extreme poverty. To this end, the World Bank has been working with Paraguay to strengthen resilience to risks and volatility; boost pro-poor delivery of public goods and services; and promote agricultural productivity and market integration. Population: 6,811,297 GDP (billions): US$29.73 GNI per capita: US$3,920 IBRD/IDA lending commitments approved in FY17: 100 million New and supplemental Projects approved in FY17: 1 PAGE 95 CHALLENGE and macroeconomic stability over the last 15 Paraguay has achieved impressive economic years, important challenges remain given its and shared prosperity over the last 15 years. The current growth composition and the risks to its economy grew at 4 percent per year on average sustainability. To deliver lasting and sustainable during 2014–2017, slower than the annual 4.7 wealth creation, especially for the bottom 40 average growth seen between 2004–2014 but percent, Paraguay’s development model must faster than most of its regional comparators. evolve. First, the incorporation of land into the Paraguay’s rapid growth in the past decade is productive process should be limited by the need attributable to its fertile land and agriculture, its to contain deforestation and avoid depleting water resources and hydroelectric energy, and its Paraguay’s natural capital with a shift in focus from sound macroeconomic management. The country agricultural production to increased productivity. has made good use of its traditional comparative Second, human capital must play an increasing advantage in natural capital. role in economic growth. The demographic dividend will continue for the next few decades, but its contribution to growth impact will slowly Due in large part to the decline. Educational attainment has increased in strong performance of recent years, and this trend should be matched its agricultural exports by improvements in learning outcomes. Social (soy and beef), Paraguay protection policies should also focus more on human capital generation, assigning more stands out in the resources to children (and, particularly, early region for the positive childhood development). The growth of the youth contribution of net trade population—which requires an estimated 65,000 new jobs every year until 2030—combined with to growth. the rapid and insufficiently planned urbanization process, will demand a dynamic economy and Although Paraguay has achieved high efficient public policies that promote job creation, economic growth, strong poverty reduction, particularly in urban areas. Lastly, institutional PAGE 96 changes are taking place, but these will need to transparent and predictable prices for Paraguayan advance rapidly to respond to the population’s grains. Additionally, Doing Business advisory work expectations, especially young people. on promoting economy formalization has helped to reduce the hurdles to company registration, simplify insolvency mechanisms, and improve APPROACH access to credit for small and medium enterprises The World Bank program supports Paraguay through secured lending; a related bill is currently by financing projects in strategic areas such under legislative discussion. as rural development, water and sanitation, energy and roads, and both reimbursable and The Bank’s analytical work on financial inclusion nonreimbursable technical assistance. Advisory was followed by government implementation of a services have expanded considerably, covering national strategy, leading to a 350-percent increase topics such as financial inclusion, agricultural risk, in the number of adults with accounts since 2011. macroeconomic volatility, education, state-owned Substantive analytical work on fiscal policy and enterprise reform, poverty/equity analysis, and equity has provided a basis for the current dialogue public expenditure reviews in the social sectors. on fiscal reform and tax progressivity. The demand Some analytical work has resulted in tangible for WBG advisory services remains high and has led outcomes, such as the Bolsa Agrícola (operational to an important engagement through reimbursable since December 2017), which provides more technical services (RAS) on strategic areas for Paraguay, such as governance, transparency, management of the environment, and education. RESULTS International Bank for Reconstruction and Development financing helped Paraguay to achieve the following results: Doña Luciana, Water project beneficiary, Paraguay. Photo: World Bank PAGE 97 • Improved agricultural productivity. has contributed to improve the sanitation The Sustainable Agriculture and Rural environment for 270,000 persons in the urban Development Project (PRODERS), the main area (10% of grater Asuncion) by helping in government tool for fighting rural poverty, the development of the first ever sanitation has provided agricultural services, particularly masterplan for the Greater Asuncion, that is technical assistance, to 240,000 beneficiaries now under full implementation. The project has overall, in 48,251 households. A recent random funded the rehabilitation of 57 drinking water sampling of 1,029 households from among distribution networks, rehabilitation of 8.4 km those benefiting from the estrategia campesina of sanitation networks, and the construction of (strategy for farmers) between 2011 and 2016 33 primary sewerage collectors. The project is concluded that 24,875 poor households in preparing the grounds for the first wastewater Eastern Paraguay can be expected to report treatment plant in Greater Asuncion. In an increase in real agriculture incomes by addition, the project has supported the 2018. At the local level, the project has also construction of 60 rural water systems - half built significant capacity and commitment in are attending indigenous communities in Chaco more than 600 rural communities to plan and - benefiting about 11,000 people in eastern execute local development interventions. As a Paraguay and about 6,000 people in Chaco. result, by 2018, 180 indigenous communities have prepared and are implementing socioeconomic development plans, surpassing by far the original target of 130 communities. • Improved access to quality water and sanitation services: The Water and Sanitation Sector Modernization Project has supported the strengthening of the water and sanitation sector’s institutions from the policy maker, regulator, environmental authority as well as water providers. The project Rural road rehabilitation, Paraguay. Photo: World Bank PAGE 98 • Improved road infrastructure in target by La Administración Nacional de Electricidad areas, particularly benefiting the rural (National Electricity Administration), population. The Road Maintenance Project improving the quality of access by reducing expanded rural connectivity and helped service cuts and repair times. strengthen government capacity to define investment priorities and develop efficient work programs aligned with existing budgets. This increased efficiency Institutional improvements have also been has benefited 2.5 million supported by legal actions in five key areas: people in the Asuncion passage of a transit and road safety law; passage of a law to amend the classification of the road Metropolitan Area, of system; creation of a planning department in whom approximately 15 Minister of Public Works (MOPC); increases percent are below the in toll rates to cover the costs of the system; national poverty line. and creation of a department charged with ensuring transparency and public participation. The project financed improvements to about WORLD BANK GROUP CONTRIBUTION 141 kilometers of unpaved roads and many The World Bank’s active lending portfolio in bridges in the three targeted departments and Paraguay totals US$401 million and consists of four contributed to the introduction of performance- investment lending projects: Rural Development, based contracts, with three contracts Improvement of Electricity Delivery, Transport implemented for a total of 624 kilometers. Connectivity, and Improved Water and Sanitation. The Transport Connectivity project (US$100 • Increased efficiency of the transmission million) became effective in January 2018. The RAS network. The energy supply through the portfolio (US$5 million) in Paraguay began in 2016 transmission network has increased by and has been very successful to date in channeling 65 percent, from 3,000,008 to 4,949,000 demand for knowledge services to high-priority kilowatt hours. The project was successful in areas. The RAS portfolio includes activities with modernizing the communication system used PAGE 99 the Central Bank; the Social Protection Institute; promote dialogue on the country’s development Itaipú Binacional, a major producer of hydroelectric challenges include those with leaders from the power; and the Ministry of Finance and Minister of private sector, such as the Club of Executives of Education. Two new RASs are in preparation in the Paraguay, and from civil society organizations, social protection and health sectors. such as Club de las Ideas and Paraguay Debate. PARTNERS MOVING FORWARD The World Bank has maintained close partnerships The World Bank is preparing a new Country with other donors, especially the European Union Partnership Framework (CPF) for the period on the education and social protection agenda, from fiscal years 2019 to 2023, aligned with the the United Nations in the agricultural sector, objectives of Paraguay’s National Development and the Inter-American Development Bank on Plan 2030 and the five-year strategy laid out by infrastructure initiatives. Other partnerships to the incoming Abdo Benitez Administration in Power network maintenance, Paraguay. Photo: National Electricity Administration PAGE 100 its Plan de Gobierno 2018–2023 “Paraguay de la Gente.” The CPF is built around three focus “Thanks to our garden areas: (i) promoting accountable institutions and we have a weekly income an improved business climate; (ii) natural capital with which we can feed management and integration into sustainable our children and buy value chains; and (iii) building human capital. In addition, recognizing that socioeconomic school supplies,” says progress is highly contingent on strengthening Librada. the social contract between the government and the population, the CPF will also encompass a cross-cutting emphasis on transparency, results orientation, and accountability. BENEFICIARIES Librada González, a rural producer and beneficiary of PRODERS, the rural development project, carefully arranges the products of her garden in two large baskets, preparing to take them to the municipal market of Caaguazú, about 20 kilometers from her farm, in the community of Cantera Boca in the east of the country. Librada, along with 20 other women, works in a community garden growing produce sold at the weekly village fair. To become small producers, she and her associates received financial support and training on producing sustainably. PAGE 101 Uruguay. Photo: World Bank PAGE 102 URUGUAY BECOMING RESILIENT: STRENGTHENING URUGUAY’S FISCAL MANAGEMENT AND INVESTMENT IN HUMAN CAPITAL TO TACKLE CHALLENGES POSED BY AN UNCERTAIN FUTURE As a small and open economy vulnerable to external shocks, Uruguay must invest in human capital while preparing itself to reduce the impact of potential external risks. World Bank Group engagement with Uruguay has focused on the design of innovative instruments to tackle these challenges and has provided a model for replication by other member countries. Population: 3,456,750 GDP (billions): US$56.15 GNI per capita: US$15,250 IBRD/IDA lending commitments approved in FY18: 54 million New and supplemental Projects approved in FY18: 2 PAGE 103 CHALLENGE accelerated again in 2017, however, and is expected Uruguay stands out as a success story in Latin to surpass 3 percent by 2019. America for its prolonged and broad-based economic growth, track record of macroeconomic The country’s strong economic performance and stability, transparent institutions, and deep social progress have been framed by two fundamental commitment to equity. features: (i) Uruguay’s status as a small, open economy (defined as an economy participating in international trade but small enough compared With the largest middle to its trading partners that its policies do not alter class of any Latin world prices, interest rates, or incomes) and (ii) American country, its strong social compact. These attributes also Uruguay is also notable present Uruguay with important challenges that can potentially block its development path. Its for its high per capita* status as small, open economy, exposes Uruguay income and the nearly to spillovers from events in its larger neighbors, complete absence of possibly resulting in volatility adversely affecting national growth and welfare. Uruguay must also extreme poverty. *US$21,090 in purchasing parity income in 2016. The country grew at an average pace of 4.54 percent between 2003 and 2016, mainly attributable to stable macroeconomic policies and a favorable external environment. Due to weakening exports, investments, and consumption, this positive trend came nearly to a halt in the final quarter of 2015 and the first half of 2016. Growth School in Montevideo, Uruguay. Photo: Presidencia Uruguay PAGE 104 access international markets to ensure growth. Regarding social impact, emerging tensions related to an aging society, social mobility, quality of education, and labor markets may jeopardize the country’s growth model, including improvement in productivity levels, and disproportionately affect vulnerable populations. APPROACH Based on the challenges presented by the country’s Sewage water plant construction, Uruguay. Photo: Presidencia Uruguay two fundamental features, the dialogue between the in the national agenda to key issues surrounding World Bank Group and Uruguay revolves around a human capital investment, such as the future of partnership focused on innovation, expertise, and work, demographic change, education, and social global knowledge exchange. Particular highlights inclusion of vulnerable groups. of this collaboration are (i) the development of tailored financial risk management products and (ii) new areas of engagement to support the nation’s RESULTS poverty reduction strategy. Financial management Measuring the impacts of financial risk efforts include innovative operations such as a management products can be challenging, mainly weather and oil price insurance transaction (2013), because the benefits only become apparent when a fully contingent investment lending project (2014) external shocks take place. Nonetheless, the for reducing exposure to low rainfall and costs of following program results can be noted: electricity production, and an oil hedging program • Weather insurance. As the largest (2016), all designed to protect the economy from transaction of this kind in the market (US$450 abrupt changes in international crude prices million), and the first instance of a public and to shield the country’s fiscal position from utility company using this financial tool, this external risks. In support of poverty reduction operation reduced the country’s exposure efforts, the World Bank helped elevate attention PAGE 105 to the costly fiscal liabilities that can result transaction, which covered approximately half from low rainfall and high oil prices. This of Uruguay’s total annual oil imports for 12 approach fostered proper and responsible months, moderated the impact of potential oil fiscal management and buffered fiscal impact, price increases on Uruguay’s fiscal budget and thus protecting Uruguay’s most vulnerable the overall economy. electricity consumers from sudden price rises. This operation was announced in December Major achievements in the area of human capital 2013 and insured the public company for the investment included the following: following 18 months. • A final technical assistance report related to • The Drought Events and Impact demographic change and social policies was Mitigating Investment Project (US$200 disseminated to inform the government’s million). This contingent investment project agenda for elaborating its National Strategy to financing was approved in December 2014 in 2050. Demographic change is now a central a period when Uruguay’s response to droughts topic under discussion for inclusion in this was to switch to thermal energy sources, document. increasing production costs. This project’s • The Full-Time School model (FTS), supported innovative operation provided a three-year by the Bank, has shown preliminary positive contingent buffer, allowing the government to avoid shifts in spending that might affect public services or lead to increased tariffs, both of which disproportionally affect the poor. It also allowed an increase in the use of renewable energy sources. The project was canceled in May 2017. • Oil hedge. This was the first commodity hedge transaction between an emerging market and the World Bank. Announced in June 2016, the Pediatric health center in Salto, Uruguay. Photo: Presidencia Uruguay PAGE 106 quality results. Between 2013 and 2016, their reforms on program budgeting), sixth-grade students’ test scores increased Nicaragua (to improve the country’s statistical 6.4 percent for mathematics and 3.8 percent capacity), and Costa Rica (to share the in reading. The project directly benefited country’s experience with nonrenewable water an estimated 61,791 students, of whom 49.1 management) and received representatives percent were female. from Uganda’s private sector (sponsored by IFC under the framework of the Global Animal Protein advisory project). With WBG support and facilitation, the country WORLD BANK GROUP CONTRIBUTION has participated in 17 World Bank Group operations have included South-South initiatives on a mix of financial, knowledge, and convening a variety of subjects, such services with a focus on innovation and results. The current International Bank for Reconstruction as road maintenance and Development portfolio consists of six projects and performance- valued at US$581 million, covering governance, based contracts with education, transport, agriculture, water, and fiscal management. Morocco, ICT in education with Armenia, and Advisory services and analytics financed by the information systems in Bank have focused on efficient and sustainable agriculture with Mexico. use of natural resources, such as climate-smart agriculture, green growth, REDD+ (reduced emissions from deforestation and forest Uruguay has also hosted delegations from degradation), and so on; increased efficiency of Kyrgyzstan (on improving its application of public investments (governance of state-owned information systems in the electric national enterprises); transport (LC7 Farms-to-Markets company), Zimbabwe/Botswana (to inform Study, smarter urban mobility, clean bus systems); PAGE 107 labor skills (demographic change and social PARTNERS policies, technological change and labor markets); The partnership between Uruguay and the World education (education reform); and, funded by the Bank Group has been productive and mutually Korean Green Growth Trust Fund, social inclusion beneficial. In line with an innovative approach of vulnerable groups (accessible tourism). to development, the WBG has provided Uruguay with targeted technical advice in critical priority Since Uruguay joined the International Finance areas with global and regional significance, while Corporation (IFC) in 1968, IFC has invested Uruguay has developed and tested products and US$573 million in Uruguay’s private sector, solutions that are informing WBG practices and including US$150 million mobilized from third engagements with other member countries. parties. As of August 31, 2018, IFC’s committed portfolio in Uruguay stands at US$15 million. The institution has three active clients in the dairy, Uruguay’s experience citrus, and financial technology (fintech) sectors. has produced important IFC’s most recent investment was a US$0.8 million lessons that have placed rights issue for the fintech company Scanntech, committed in 2017. the country in a leading position for knowledge MIGA has one guarantee in Uruguay, valued at exchange with other $439 million, covering equity investments and countries. shareholder loans by Banco Santander’s local subsidiary. The mandatory reserves coverage is To accomplish this, strong relationships have for a period of up to 10 years, allowing the bank to been cemented with several line ministries, reduce its capital requirements and thus freeing up public entities, local governments, and other capacity under the existing limits on a consolidated institutions, with the Bank as a central partner in basis. This allows the private institution to provide providing knowledge and leveraging resources. additional lending to SMEs, a highly unbanked Among others, this relationship underpinned segment in the country. PAGE 108 organizations include an in-depth analysis of the opportunities and constraints in areas relevant to Uruguay’s development, producing policy notes that informed the new Country Partnership Framework (2016–2020). MOVING FORWARD Further consolidation of recent gains in poverty reduction and further progress in economic Children in Toledo, Uruguay. Photo: Presidencia Uruguay growth and social cohesion will require a broad work carried out with the World Bank Treasury inclusion agenda. In a country like Uruguay, which for the application of novel financial instruments; is small, with an open economy and a strong an analytical partnership with United Nations social compact, a long-term strategy for poverty Economic Commission for Latin America and reduction and inclusion requires focusing on the Caribbean for the preparation of a report on issues such as demographic change and education, demographic change and social policies; and active with attention to early childhood development collaboration with Columbia University on the and skilled youth. Attention to the latter is highly analysis of climate-smart agriculture techniques, complementary with the challenges presented by for which Uruguay is a leader. an aging population. A productivity boost will be needed that will enable all citizens to contribute In addition, and in coordination with the to the economy. The Bank is delving into these government, the World Bank has worked in issues and stands ready to further its engagement, close alignment with other relevant multilateral beyond Advisory Services and Analytics, in financial institutions in the country (that is, education, social development, and labor inclusion the Inter-American Development Bank and the of identified vulnerable populations. Success in Development Bank of Latin America) to support meeting these challenges will not only generate Uruguay’s development agenda. An example of positive results for Uruguay, it will also provide the cooperative efforts of these three multilateral important lessons for the region. PAGE 109 This dynamic also applies to the development of impacts arising from existing gaps in access to innovative financial risk management products, selected markets, services, and spaces of the most where the World Bank and the Uruguayan vulnerable groups (afro-descendants, LGBTI government will jointly continue to explore individuals, and people with disabilities). and test innovative modalities, with a focus on complementarity, synergies, and sustainability. BENEFICIARIES These exchanges have led to consideration of “The sun is very strong, and if planting is not several other projects, including the potential for done with shade, the sun will burn everything,” fully contingent investment project financing in farmer Orlando Marenco says as he proffers one of Brazil, the application of a Catastrophe Deferred his most prized products: sweet cherry tomatoes. Drawdown Option in Uruguay, and also in Although the plot where Marenco also grows Uruguay, analysis of the economic and social Farmer Orlando Marenco, Uruguay. Photo: Presidencia Uruguay PAGE 110 peppers, squash, and sweet potatoes has nothing In addition to the concrete actions Uruguay is unusual about it, he says it was necessary to implementing to reduce greenhouse gas emissions introduce technological improvements to mitigate and apply technology to improve agricultural the impact of insufficient rains. “The weather is production, one of the country’s most interesting difficult, and there is nothing we can do except advances is the development of the National adapt to it,” he adds. Agricultural Information System. The platform, which has World Bank financial support, will also Marenco’s story is just one of many about how help predict, control, and plan for different climate Uruguayan farmland is being adapted to climate scenarios. change: a problem that is no longer part of the future, but here and now. The Sustainable Management of Natural Resources and Climate Change project has provided support to 4,900 farmers to date to adopt improved agricultural technologies. At project closure in November 2021, the total number of beneficiaries is expected to reach 7,000. PAGE 111 Elementary school in Arima, Trinidad. Photo: GEF PAGE 112 OECS TRANSITIONING TOWARD A BLUE ECONOMY IN GRENADA AND OTHER EASTERN CARIBBEAN STATES The blue economy, defined as a sustainable ocean economy that balances economic activity with preserving the long-term capacity of healthy coastal and marine ecosystems, has provided a means of addressing the Eastern Caribbean region’s poverty and unemployment challenges through sustainable financing mechanisms and enhanced capacity for effective management and protection of the environmental base needed for future economic growth. Population: 7,284,294 GDP (billions): US$69.33 GNI per capita: US$8,985 IBRD/IDA lending commitments approved in FY18: 0.5 million New and supplemental Projects approved in FY18 1 PAGE 113 CHALLENGE poorly planned coastal development and The small island countries of the Organisation overexploitation of marine resources. To combat of Eastern Caribbean States (OECS) face serious unsustainable practices, continue reaping the development challenges, coupled with low growth, benefits of the ocean economy, and maximize natural disasters, high debt, unsustainable returns to eradicate poverty and catalyze approaches to resource management, and limited sustainable development, OECS countries must fiscal space in which to maneuver around these focus on adaptive, fully collaborative, integrated problems. OECS countries have not reduced management approaches. poverty and unemployment rates to levels compatible with their per capita income levels. APPROACH A series of blue economy initiatives support the Despite recent sustainable, integrated management of coastal improvements in the and marine assets so fundamental to the region’s economic growth. These include the following: region’s unemployment • Sustainable finance mechanisms, such as rate, joblessness remains the Caribbean Biodiversity Fund (CBF) and higher among youth, associated National Protected Area Trust Funds exceeding 30% in most (NPATF). countries. • The successfully completed Grenada—Blue Growth Coastal Master Plan (2016), the Furthermore, central elements for closing region’s first, paving the way for dialogue and the poverty and unemployment gap (seafood replication across OECS countries. production, tourism and recreation, shipping, • The Caribbean Regional Oceanscape Program, and nature-based solutions to absorbing shocks providing nonlending technical assistance for from natural disasters) are undermined by developing the blue economy; enhancing shared unsustainable anthropogenic practices, including learning, capacity, and conceptualization of PAGE 114 Tourist boat in Caroni swamp, Trinidad. Photo: GEF strategies, visions, and action; and fostering • Safeguarding the protection of coastal investment and innovation. and marine assets through sustainable financing and enhanced capacity. • The Caribbean Regional Oceanscape Project Sustainable finance plans were prepared (2017), the successful first investment project for each participating OECS country, and addressing the OECS blue economy, providing mechanisms were successfully adopted for aid for developing coastal and marine spatial generating additional resources. The primary plans across OECS countries, enhancing outcome was the Caribbean Biodiversity Fund capacity, and raising awareness. (CBF), now fully operational, with a board, secretariat, asset manager, and work program. RESULTS The CBF has built an endowment of US$32 Driven by client demand, efforts by the World Bank million, generating investment income of on behalf of the Caribbean’s blue economy have US$2.4 million, surpassing its US$0.25 million delivered several concrete results, including the target. following: PAGE 115 • Protecting the marine environment. The marine protected area network for participating OECS countries was strengthened through training and sensitization workshops, held between 2014 and 2016, on using drone technology to manage and monitor marine protected areas. One result was Antigua and Barbuda’s national policy on drone use in protected areas. Store Bay, Tobago. Photo: Patrizia Cocca / GEF • Building overall support for the blue country to develop a vision for protecting its economy as a way to address the “blue space” and mapping its road toward region’s poverty gap and unemployment blue growth. Grenada’s Blue Growth Coastal challenges. Addressing the 38th Caribbean Master Plan was designed to generate new Community (CARICOM) Heads of State jobs, foster alternative livelihoods, and expand Meeting in July 2017, the Bank’s Vice President the economy, all while preserving the natural for Latin America and the Caribbean, Jorge environment. This pioneering work in Grenada Familiar, reiterated the importance of support has become a model for other OECS member for the blue economy. The multisectoral countries to replicate and enhance. platform for engagement and new investments in the Caribbean set out in “Toward a Blue • Supporting Caribbean country Economy: A Promise for Sustainable Growth governments in their dialogue, vision, in the Caribbean,” a Bank report published in strategies, and solutions for the 2016, guided the discussions. blue economy. The Caribbean Regional Oceanscape Program, the Bank’s regional • Grenada’s plans for integrated ocean programmatic instrument, and specific related governance and shared prosperity. projects facilitated use among the OECS In 2016, with the Bank’s technical support, countries of integrated, fully collaborative Grenada became the first OECS member management approaches. Guided by “Toward PAGE 116 a Blue Economy” and by pioneering spatial WORLD BANK GROUP CONTRIBUTION planning work done in Grenada, integrated The World Bank Group partnership with the OECS coastal and marine spatial plans for individual has been scaled up in recent years and now includes OECS countries have been embraced as central various forms of support for countries transitioning to ensuring sustainable management and to a blue economy. The Bank has delivered two equitable distribution of projected growth. investment operations, and blue economy policy Taken together, the national plans support reforms are incorporated in the upcoming fiscal a regional vision and strategy for ocean 2018 “Grenada—Blue Growth Development Policy governance, with support across all OECS Credit.” Along with financial assistance, the Bank countries. In addition, a strategy for enhancing has provided high-quality technical assistance and capacity at all levels and raising awareness cutting-edge knowledge, as detailed above. among the region’s population will ensure proper execution and future support for the PARTNERS resulting spatial plans. Bank partners in the region include the OECS • Sustainable Financing and Management Commission and its member states, which have of Eastern Caribbean Marine Ecosystems supported these initiatives through both in-kind Project. Between June 2015 and project contributions and matching finance. The Global closing in December 2016, this project provided Environment Facility (GEF), another important 375 Ministry of Finance and Ministry of contributor to blue economy initiatives in the Fisheries staff with face-to-face training and region, supports projects such as the Caribbean webinars that strengthened their knowledge of Regional Oceanscape Project and learning and protected area management and of drone use to capacity development activities. The Caribbean monitor illegal construction on floodplains and Community has also been a great supporter and in other protected areas. Survey results show partner in endorsing the Bank’s report “Toward that training on water improvement planning in a Blue Economy.” Other partners include Virtual Grenada, for example, encouraged stakeholders Educa, supporting capacity development activities, to engage with, support, and protect the particularly those relating to innovation in ocean nation’s marine protected areas. education, through both in-kind and financial PAGE 117 contributions, and The Nature Conservancy, a Eastern Caribbean Marine Managed Areas Network strong supporter in the region providing in-kind Project, managed by the OECS Commission in technical expertise and developing analytical partnership with The Nature Conservancy, aims products for biodiversity conservation. to establish new marine managed areas while providing improved livelihood opportunities to the Other partnerships have been established people living in the Eastern Caribbean. with the GEF-funded Caribbean Large Marine Ecosystem Project implemented by the United MOVING FORWARD Nations Development Programme to improve In line with the Regional Partnership Strategy FY assessment of the status of the ecological systems 2015–2019 Framework, the Bank will continue and the region’s natural capital and to support its partnership with the OECS. The blue economy policy recommendations for conservation. The approach fits directly into the Bank’s overarching Caribbean Challenge Initiative aims to support goals of eradicating extreme poverty and effective conservation and management of at least promoting shared prosperity by working toward 20% of the marine and coastal environment by longer-term objectives of food security, jobs for 2020, including sustainable financing mechanisms coastal populations, and resilience to climate linked to the Caribbean Biodiversity Fund to cover variability among those dependent on marine long-term operating costs. Cross-collaboration resources, currently among the region’s poorest and knowledge sharing with the Climate Resilient and most vulnerable. Supporting the blue economy aligns well with regional policies and priorities, particularly the Eastern Caribbean Regional Ocean Policy and the associated Strategic Plan, which provides the framework for enhanced coordination and management of ocean resources in the Eastern Caribbean, where OECS plays a key role in regional ocean governance. Elementary school in Arima, Trinidad. Photo: GEF PAGE 118 Buccoo Reef in Tobago. Photo: Patrizia Cocca / GEF PAGE 119 Destruction after 2017 hurricane in the Caribbean. Photo: GFDRR / World Bank PAGE 120 OECS DEVELOPING A COST-EFFECTIVE STRATEGY FOR DISASTER RISK FINANCING TO INCREASE FISCAL RESILIENCE IN THE OECS COUNTRIES Caribbean countries are highly vulnerable both physically and fiscally to natural hazards, and as these events continue to intensify due to climate change, past development progress can be jeopardized. Grenada and St. Lucia have been working to improve their fiscal resilience through greater understanding and quantification of their sovereign contingent liabilities to natural disasters and by developing integrated disaster risk financing strategies. Population: 7,284,294 GDP (billions): US$69.33 GNI per capita: US$8,985 IBRD/IDA lending commitments approved in FY18: 0.5 million New and supplemental Projects approved in FY18 1 PAGE 121 CHALLENGE Grenada and St. Lucia are exposed to high levels of risk from meteorological and geophysical hazards that can have significant negative impacts on their economic stability. In Grenada in 2004, for example, Hurricane Ivan caused damages estimated above US$900 million—over 200 percent of GDP. Between 1980 and 2014, hydro-meteorological disasters and earthquakes in Grenada and St. Lucia led to losses estimated at US$1.098 billion and US$879 million, respectively (according to the DesInventar loss database). Disasters can have a Aftermath 2017 hurricane in the Caribbean. Photo: GFDRR / World Bank large, direct impact on to -1 percent in 2004. Compounding this, the government incurred high reconstruction costs, economic conditions resulting in the need to restructure its debt to meet through reduced its payments. Meanwhile, the impact of disasters is productivity and sometimes disproportionately felt by low-income increased national debt families. Rapid damage and loss assessments of conditions in St. Lucia following the 2013 trough due to reconstruction disaster, which caused flooding and landslides, costs. showed the greatest impact in geographical areas with the highest poverty levels, including Anse- La-Raye and Soufriere, where 44.9 percent and After Hurricane Ivan, Grenada’s economy 42.4 percent of the population, respectively, live in contracted, as evidenced by a drastic drop in poverty. In addition, among the productive sectors, annual GDP growth from 10 percent in 2003 agriculture suffered the greatest damage (13 PAGE 122 percent of the total), placing vulnerable families, To support Grenada and St. Lucia in increasing dependent on agricultural production, at even their fiscal resilience in the face of natural disasters, greater risk of falling below the poverty line. the following integral components were developed: As the frequency and severity of disasters (i) quantification of fiscal risk from disasters, (ii) increase due to climate change, the intensified resilience in the domestic catastrophe insurance shocks will likely push people back into poverty, market to risks from natural hazards, (iii) adoption create debt burdens on future generations, and of a disaster risk-layering approach combining erode development progress. The need to help different financial instruments, and (iv) integration governments understand their fiscal risk and create of disaster risk into a comprehensive DRM cushions against adverse economic impacts is more framework (such as public finance reform). urgent than ever. • In addition, the Bank’s standalone technical assistance (TA) has helped in the following APPROACH ways: Evidence shows that when countries have a comprehensive disaster risk management (DRM) • Disaster Risk Financing TA supported Grenada framework, including a disaster risk financing and St. Lucia in quantifying government (DRF) component, the impact of direct damages contingent liability from natural disasters, and subsequent losses can be reduced. The World identifying financial and nonfinancial options Bank Group established the Caribbean Resilience to reduce vulnerability to disaster-induced Initiative Programmatic Approach and Caribbean fiscal shocks, and developing disaster risk Disaster Risk Finance Program to build more financing strategies. resilient societies through better risk management, • The Regional Caribbean Risk Information forward-looking strategies, and comprehensive Program supports all OECS member states in investment programs. Four strategic pillars provide creating and using risk information for physical a guiding framework: (i) understanding disaster and infrastructure planning to adequately risk, (ii) disaster risk reduction, (iii) financial inform DRM investment implementation with protection against disasters, and (iv) resilient risk analyses. disaster recovery. PAGE 123 • Hazard and Disaster Risk Assessment Framework TA supports St. Lucia’s development of a Climate Adaptation Financing Facility, a private sector–directed initiative under the Disaster Vulnerability Reduction Program. This initiative aims to increase the resilience of private housing and private sector assets and to build government capacity for watershed-level flood hazard modeling to further the development of watershed management plans. Aftermath 2017 hurricane in the Caribbean. Photo: GFDRR / World Bank • TA for Measurable Reduction of Public Sector Disaster Risk in St. Lucia (“Vision 2030”) RESULTS helped provide a methodological framework to The DRFTA program produced an ongoing support prioritization of investments in specific integrated disaster risk financing strategy, with public assets, based on their contribution to strong engagement from the Ministries of Finance overall risk, and to ensure continuity of risk- (MoF) of Grenada and St. Lucia (as well as the development monitoring over time. non-OECS countries Belize and Jamaica) on the • St. Lucia Study to Measure the Impact design and implementation of DRF strategies to of Disaster Events on Poverty and Social reduce fiscal vulnerability to natural disasters. Vulnerability aims to improve understanding Other aspects of this achievement include: of the varying effects of disasters on different • Throughout 2016, in partnership with their groups in society. The resulting insights will MoFs, the Bank team worked with Grenada inform policies and programs to efficiently and St. Lucia to complete the development of support those groups prior to, during, and after historical disaster loss databases and Country disasters. Disaster Risk Profiles. PAGE 124 • The Bank has undertaken further in-depth represents grants and concessional loans from analysis of the public financial management the Climate Investment Fund’s Pilot Program for of natural disasters in Grenada and St. Lucia Climate Resilience. These funds are being used to and of the capacity of their private property strengthen critical infrastructure as well as to build insurance markets in relation to natural the countries’ technical and project management disasters. capacity. • In-country analysis and reports completed in fall 2017 include recommendations for The Bank has also building national DRF strategies, with the mobilized more central aim of improving governments’ ability to understand, quantify, and manage than US$4 million in disaster-related contingent liabilities. Outputs standalone technical of technical assistance to St. Lucia already assistance to pilot inform the design of that nation’s Catastrophe Deferred Drawdown Option, currently under innovative solutions to preparation. the ongoing challenges • Technical assistance in Grenada has opened the posed by natural disasters way to ongoing dialogue with the government and climate change in on potential next steps for DRF strategies. the region. WORLD BANK GROUP CONTRIBUTION Moreover, following the 2017 hurricane season, The World Bank, through the International the Bank supported the OECS countries by (i) Development Association, has supported the OECS working with partners to support the governments countries in building their physical and fiscal in conducting damage assessments, (ii) preparing resilience to natural disasters and the impacts emergency response projects, and (iii) disbursing of climate change through more than US$210 US$7 million in cash transfers to Dominica’s million in investment lending, 46 percent of which farmers. PAGE 125 The Caribbean Disaster Risk Financing Program, Indian Ocean Islands. (Ongoing Pacific and Indian financed by the Trust Fund of the Africa, Caribbean, Ocean catastrophe risk assessment and financing Pacific Region–European Commission (ACP-EU) programs are financed by the ACP-EU Global for an aggregate amount of US$1.2 million, is one Facility for Disaster Reduction and Recovery of the region’s many Bank-executed DRM trust Program.) TA has contributed to efforts to draw funds. Technical assistance also complemented donor attention to the region and has fostered Bank operations in the OECS countries, including additional funding opportunities. the Regional Disaster Vulnerability Reduction Program. The current total value of the Bank’s MOVING FORWARD DRM engagement in the eastern Caribbean DRFTA was completed in February 2018, following exceeds US$430 million and addresses disaster a decision review meeting held in November risk reduction, disaster preparedness, disaster risk 2017. Given the quality and depth of the technical financing, and resilient recovery. analysis conducted, the team will prepare, in addition to its final reports, an Executive Summary PARTNERS for each country highlighting its main findings, DRFTA is funded by the ACP-EU and implemented results, and recommendations and a two-page by the Bank’s Social, Urban, Rural, and Resilience summary note and short video clip addressing a Global Practice, in partnership with the Bank’s wider audience. Most importantly, the Bank is Disaster Risk Financing and Insurance Program, following up with each government to identify and jointly with the MoFs in Grenada and St. immediate next steps and priorities based on the Lucia. This TA is anchored in, and will benefit recommendations outlined under the TA. The from, ongoing dialogue under the Bank’s Disaster DRFTA team will also continue to work closely Risk Management and Climate Change Adaptation with groups both inside and outside the Bank to projects in Grenada and St. Lucia. The program, share and disseminate the knowledge created. implemented in collaboration with the Caribbean In the meantime, the Bank will leverage the DRFTA Catastrophe Risk Insurance Facility Technical findings to inform other Bank lending and TA Assistance Program, also benefits from current projects, such as a Development Policy Loan with risk financing initiatives in the Pacific region and a Catastrophe Deferred Drawdown Option and PAGE 126 eGovernance, and will hold strategic dialogue with shocks. Subsequently, in post-disaster relief and other OECS countries to extend implementation of recovery, governments should have the resources DRFTA work to Dominica and St. Vincent and the and means at their disposal not only to finance their Grenadines. direct contingent liabilities more efficiently but also to more effectively provide additional aid to small businesses and low-income farmers, who are BENEFICIARIES disproportionately impacted by disasters. The DRFTA team organized and facilitated South- South knowledge exchange through a regional workshop on disaster risk financing, held in Barbados in October 2017. Delegates from MoFs of Grenada and St. Lucia and representatives from development partners, including the Caribbean Development Bank, the Caribbean Regional Technical Assistance Center (CARTAC), the UK’s Department of International Development, and an EU delegation, attended. The workshop presented DRFTA’s main findings and recommendations on quantifying pre- and post-disaster contingent Aftermath 2017 hurricane in the Caribbean. Photo: GFDRR / World Bank liabilities to governments and public financial management. In addition, the team introduced an innovative, participatory post-disaster risk financing simulation that enables stakeholders and attendees to appreciate the importance of building a disaster risk financing strategy. As these strategies are more widely adopted and implemented in the OECS countries, the MoFs will become more financially prepared for and resilient against future natural disaster and climate PAGE 127 Kendal Bridge, Belize. Photo: CDB PAGE 128 OECS PROMOTING EVIDENCE-BASED POLICIES FOR INCLUSIVE GROWTH IN OECS COUNTRIES The Commission and members of the Organisation of Eastern Caribbean States have developed policies to improve statistical capacity and produce comparable statistics for evidence-based policy making by addressing the limited capacity typical of small island developing states. Under a regional approach, member countries have benefited from economies of scale and South-South knowledge exchanges to build statistical capacity and to develop innovative, timely, cost- effective methods for data collection and data analysis. Population: 7,284,294 GDP (billions): US$69.33 GNI per capita: US$8,985 IBRD/IDA lending commitments approved in FY18: 0.5 million New and supplemental Projects approved in FY18 1 PAGE 129 CHALLENGE poverty declined less in the Caribbean than in the The member nations of the Organisation of Eastern Latin America and the Caribbean region overall. Caribbean States (OECS) are highly susceptible Moreover, given resource constraints, updated to external and climate shocks. While the OECS poverty assessments have not been completed. countries experienced high levels of growth in the Targeted poverty-reduction interventions therefore 1980s, they have experienced significant growth lack current poverty data. slowdowns since the 1990s, with annual growth rates of 2 percent or less on average. Natural Weak statistical capacity is common among disasters are estimated to have cost an average of OECS members, especially human, technical, and 3 percent of gross domestic product (GDP) in the financial resources. Several countries, including twenty years through 2015. Preliminary estimates Antigua and Barbuda and St. Vincent and the of damages in Dominica from Hurricane Maria in Grenadines, have recently conducted their first 2017 have reached as high as 200 percent of GDP. labor force surveys. The latest Household Budget Survey (HBS) for many OECS countries was carried out in mid-2000s, financed by the Caribbean Vulnerability and low Development Bank (CDB). Frequently, data levels of growth threaten documentation and storage systems are lacking. the region’s path to These and other deficiencies result in substantial reduced poverty and data gaps, and many Caribbean countries thus rank low on the World Bank’s Statistical Capacity shared prosperity. Indicator. OECS members neither collect nor monitor APPROACH poverty indicators on a regular basis. The latest The Bank adopted the Caribbean: Poverty and poverty estimates were produced by the Caribbean Equity Programmatic Approach and related Development Bank (CDB) Country Poverty initiatives for tackling the limited statistical Assessment (CPA) between 2005 and 2009. The capacity typical of small island developing states. limited data suggests that over the past decade These efforts include the following: PAGE 130 systems sequentially from the initial steps of data collection to the final steps of data dissemination. RESULTS • Bank lending, trust fund financing, and analytical support between 2014 and 2017 helped achieve the following results: School opening in St. Vincent & The Grenadines. Photo: CDB • Increased cost-effectiveness and timeliness of • An innovative, cost-effective approach to data collection. OECS member states received data collection and analysis requires fewer training and technical assistance in the use human resources than traditional approaches. of CAPI methods for data collection. The For example, computer-assisted personal advantages of using CAPI include (i) reduced interviewing (CAPI) methods were used for turnaround time between survey collection and data collection, and automated economic production of analysis, (ii) ability to program analysis software was used for data analysis. question checks and skips in questionnaires, • A regional approach standardizing the and (iii) decreased number of data errors statistical system allows OECS countries previously generated by the scanning process. to benefit from economies of scale and St. Lucia and Grenada, early adopters of CAPI, South-South knowledge exchanges, using, for now run the LFS on a quarterly basis. example, the OECS Regional Strategy for the • Adoption of harmonized statistics and Development of Statistics. statistical practices. The Bank and other • A systematic approach gradually builds capacity development partners’ support for a regional from a simple survey, such as the Labor Force approach to building and strengthening Survey (LFS), to more complex efforts, such as institutional, organizational, and human the Household Budget Survey, and improves capacity for statistical development across PAGE 131 the OECS region was expressed in the OECS dissemination. Several Bank trainings were Regional Strategy for the Development of conducted in regional workshops. Some Statistics (RSDS). The OECS countries have OECS countries more advanced in adopting adopted the standardized Labor Force Survey innovative approaches and producing and Household Budget Survey. statistics, such as St. Lucia, led the South- South knowledge exchange in workshops and consultations with other OECS members. The Labor market statistics follow-up workshop on using CAPI for data are now comparable, collection, for example, was conducted by the helping to inform Statistical Office of St Lucia. regional economic • Use of data for evidence-based policy making planning. Poverty in some OECS countries. Grenada presented assessments and a employment numbers in its budget and used the LFS to monitor labor market trends. St. multidimensional Lucia regularly uses LFS for labor market poverty index were also monitoring and analysis. Antigua and Barbuda, developed at the regional St. Kitts and Nevis, and St. Vincent and the Grenadines are preparing their first labor level. briefs. WORLD BANK GROUP CONTRIBUTION • Enhanced economies of scale and South-South The Bank, through the Trust Fund for Statistical knowledge exchanges. Integration of the OECS Capacity Building, oversaw the distribution countries into an economic union allowed them of project financing in the aggregate amount to share fixed infrastructure costs and to rely on of US$500,000. In addition, credits from the country connections to achieve some economies International Development Association financed of scale in adopting new forms of technology, the St. Vincent and the Grenadines Household training, capacity building, and knowledge Budget Survey and enhanced Country Poverty PAGE 132 Assessment (eCPA). Under this project, the harmonized HBS will be conducted using CAPI, a cost-effective approach. The new HBS and eCPA will help identify the poor and vulnerable, improving social protection policy targeting. PARTNERS Several project activities have been implemented jointly or in close coordination with other donors and development partners. The Caribbean Technology workshop in a school, Barbados. Photo: CDB Development Bank approved an enhanced 2015–2019 eCPA and is expected to finance the MOVING FORWARD collection of the Household Budget Surveys and The Bank will continue its partnership with the the eCPA for each member state. The Bank and OECS Commission and member states to promote the CDB co-financed St. Lucia’s 2015–2016 HBS, evidence-based policy making that fosters inclusive which is expected to become a model for other growth, builds resilience and sustainability, and member states under the CDB eCPA project. The informs regional economic planning. The Bank Bank is financing St. Vincent and the Grenadines’ will also continue to leverage its expertise and help 2018–2019 HBS and eCPA and, jointly with mobilize other development financing to achieve the United Nations Development Programme sustainability and regional development, with (UNDP) under the Department for International these particular goals foremost: (i) to increase the Development Externally–Financed Output frequency of data collection and poverty estimates, (DFID-EFO), it supported the development of the (ii) to produce comparable and timely statistics, OECS RSDS, which emphasizes the need to pilot and (iii) to support the design and formalization of innovative methods to collect, document, and the OECS Regional Statistical System. disseminate data in the region. UNDP and CDB have also supported CAPI methods by supplying hardware. PAGE 133 BENEFICIARIES Regular availability of current poverty and labor National Statistics Offices in the OECS have moved market statistics allows governments to make from paper to electronic environments, facilitating more effective policy decisions. The Honorable data collection processes. Edwin St. Catherine, Oliver Joseph, Grenada’s Minister for Economic Director of St. Lucia’s Central Statistics Office, Development, Trade, Planning, Cooperatives, and has commented on this transition: “It assists us International Business, stated at the official launch in collecting interviews . . . and also allows us to of the OECS Regional Strategy for the Development collect better data. . .. What we are doing here of Statistics, “These are the factors that have us, the today is sharing experiences in a South-South policy makers, juggling scarce resources among cooperation. Hopefully, [other member states] can demanding and competing public services. How take a lot of information back to their individual much do we spend on roads? How much do we countries so data collection is done in a more allocate to health services? To education? I can effective way.” certainly attest to this daily challenge, having a portfolio for Economic Development, Trade, and Planning. My decisions and policy proposals are hindered without evidence: timely and relevant data.” PAGE 134 Students from a secondary school in Grenada. Photo: CDB PAGE 135 Habitantes de Limón, Costa Rica, Photo: Jessica Belmont / World Bank Collection Latin America and Caribbean Region The World Bank 1818 H Street, NW Washington, DC 20433, USA http://www.worldbank.org/results/ This book was produced by the Latin America and Caribbean Regional Operations Services Unit in collaboration with the Latin America and Caribbean External Communications Unit October 2018