This new program will help Peru strengthen fiscal management and make progress toward OECD accession.
WASHINGTON, August 9, 2024 - The World Bank's Board of Executive Directors today approved a loan to help Peru achieve a more efficient fiscal policy, and a more productive economy adapted to climate change by promoting actions that help the country progress toward OECD accession.
The reforms promoted by this US$500 million loan aim to close the productivity gap in Peru, where the average firm is only 5 percent as productive as the global productivity frontier. These reforms are designed to strengthen the credibility and transparency of fiscal policy and the implementation of fiscal consolidation over the medium term. They also focus on reducing spatial disparities and increasing the generation of formal, better-paying jobs.
The program focuses on strengthening fiscal management by safeguarding the independence and effectiveness of the fiscal council, improving monitoring and management of fiscal risks, combating tax evasion, and accelerating the preparation of public-private partnerships (PPPs) to enhance the efficiency of infrastructure spending.
The loan also addresses the need for climate change adaptation, which is key to the country's competitiveness, especially in the agriculture sector. It will promote deforestation-free production practices and build resilience to extreme climate events that mainly affect the poorest. The program supports Peru's innovation system, competition framework, and digital transformation. It also supports the Green Finance Roadmap and Green Taxonomy and aims to improve the competitiveness of agricultural value chains.
"We support structural reforms that will allow Peruvians to achieve OECD standards of well-being, especially by significantly increasing the number of formal, well-paid jobs, generating sufficient fiscal revenues, and using these revenues to provide higher-quality public services that reduce spatial disparities," noted Issam Abousleiman, World Bank Country Director for Bolivia, Chile, Ecuador, and Peru.
This World Bank financing is a decisive step for Peru in its commitment to OECD accession and pursuit of inclusive and sustainable economic development.
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