The World Bank Approves a US$ 700 Million Loan to Promote Ecuador’s Green, Resilient Economic Recovery
WASHINGTON – The World Bank Board of Directors today approved a US$ 700 million loan for Ecuador. This financing will support government efforts to mitigate the impact of the COVID-19 crisis and foster growth, inclusion, job creation and climate resilience.
The approved operation is the first of three loans that will allow the Ecuadorian government to continue its policies to address structural challenges to achieve fiscal sustainability, promote job creation and protect the most vulnerable population, as well as to strengthen low-carbon development and fulfill the country’s commitment to carbon neutrality by 2050.
“This operation reflects Ecuador’s decision to create opportunities, generate employment, guarantee transparency and fiscal sustainability with equity, and promote climate action. The World Bank’s mission is to reduce poverty, promote shared prosperity for those who have the least, and achieve environmental sustainability. Thus, today’s decision by the Bank’s Board of Directors is an acknowledgment of Ecuador’s commitment to sustainable, equitable growth for the planet,” said the Minister of Economy and Finance, Simón Cueva.
This new financial operation has two pillars. The first will support government efforts to promote more inclusive, resilient fiscal management through inclusive, transparent and green tax collection; promote growth and job opportunities by reducing trade barriers and labor market rigidity; and strengthen mechanisms to support the most vulnerable groups, including people living in extreme poverty and malnourished children.
The second pillar will support actions to encourage private sector participation in the financing of non-conventional renewable energies, facilitating renewable distributed generation, an institutional framework to prioritize investments in energy efficiency, decarbonization of the transport sector, measurement and reporting of greenhouse gases, mitigation initiatives and development of voluntary carbon markets.
“The COVID-19 pandemic has had many repercussions for countries’ development. Today, governments must address these challenges by thinking about solutions that allow sustainable growth while protecting the most vulnerable,” said Marianne Fay, the World Bank Director for Bolivia, Chile, Ecuador and Peru. “The World Bank helps countries take advantage of green growth opportunities. Ecuador is taking important steps to advance on the path of ecological transition, which will allow it to build environmentally-friendly practices and at the same time prevent the impact of climate change on the most vulnerable groups,” she said.
The financing is a variable rate loan with a maturity period of 16.5 years, including a 5-year grace period.
World Bank Group COVID-19 Response
Since the start of the COVID-19 pandemic, the World Bank Group has deployed over US$ 157 billion to fight the health, economic and social impacts of the pandemic, the fastest and largest crisis response in its history. The financing is helping more than 100 countries strengthen pandemic preparedness, protect the poor and jobs, and jump start a climate-friendly recovery. The Bank is also supporting over 50 low- and middle-income countries, more than half of which are in Africa, with the purchase and deployment of COVID-19 vaccines. It is making US$ 20 billion in financing available for this purpose until the end of 2022.