The World Bank Approved a US$ 500 Million Loan to Strengthen the Foundations for a Green, Resilient Economy in Peru
Washington – The World Bank Board of Directors today approved a flexible US$ 500 million loan to support reforms that strengthen the foundations for a green economic recovery, build greater resilience to natural hazards, improve climate change adaptation and foster the transition to a green economic recovery in Peru.
Peru is among the Latin American countries with the most robust economic growth and highest levels of poverty reduction in the first two decades of the 21st century. Following the export boom, however, the economic growth rate slowed to an average of 3.1 percent annually between 2014 and 2019. Much of this growth also came at the cost of environmental degradation. Additionally, the economic crisis triggered by the COVID-19 pandemic has had a devastating impact on people’s lives, employment and the economy. These impacts have underscored the importance of building greater resilience in the country, which means strengthening the capacity of people and institutions to take timely, effective action to face and overcome disasters caused by climate change and external shocks.
Currently, Peru has embarked on the path to economic recovery, placing social inclusion and equity at the center of its policy priorities. The Peruvian government is also reinforcing the country’s commitment to reducing environmental degradation, transitioning to a low-carbon economy and boosting resilience to natural hazards.
This financing operation will help strengthen policies through three pillars. The first pillar supports reforms for economic recovery by creating a framework to mobilize capital at scale to finance sustainable investments and by promoting a more efficient preparation and implementation of public and private investments.
The second pillar promotes actions to increase the country’s resilience to natural hazards and accelerate its climate change adaptation by strengthening disaster risk management policy and pertinent institutions, as well as by incorporating disaster risk management into urban planning.
Finally, the third pillar supports actions to guarantee a more efficient use of natural resources and facilitate the shift towards low carbon technologies, with a focus on the energy and transport sectors, which are currently responsible for a third of Peru’s carbon emissions.
“The World Bank supports Peru’s efforts to build the foundations for a greener, more resilient and inclusive economic growth that enables it to effectively absorb and overcome external shocks,” said Marianne Fay, World Bank director for Bolivia, Chile, Ecuador and Peru. “This is the first of two operations to promote the transition to clean energy, more sustainable housing and transport systems, which support the development of more efficient and productive cities, among other benefits,” she said.