Peru will receive $500 million from the World Bank to strengthen the foundations of the country’s green and resilient economy
Washington, March 31, 2022 The Board of Executive Directors of the World Bank today approved a US$500 million unrestricted loan to support reforms that strengthen the foundations of a green economic recovery, build greater resilience to natural hazards, improve adaptation to climate change, and drive the transition to a green economy in Peru.
Peru is among the Latin American countries that performed better and reduced poverty the most in the first two decades of the twenty-first century. However, after the boom in exports, this progress slowed to an average of 3.1% per year between 2014 and 2019. Much of this economic growth has also come at the expense of environmental degradation. Then, the economic crisis caused by COVID-19 has had a devastating impact on people’s lives, employment and economy. These impacts highlight the importance of building greater resilience in the country. That is, developing a greater capacity of individuals and institutions to respond to disasters caused by climate change and external shocks and to overcome them appropriately and effectively.
Currently, Peru has embarked on the path of economic recovery, placing social inclusion and equity at the center of its policy priorities. In parallel, the Peruvian government has strengthened its commitment to reducing environmental degradation, transitioning to a low-carbon economy, and increasing resilience to natural hazards.
This funding process will support policy strengthening through three pillars. The first pillar supports reforms for economic recovery, by establishing a framework for large-scale capital mobilization to finance sustainable investments and by promoting more efficient preparation and implementation of public and private investments.
The second pillar supports actions aimed at increasing the country’s resilience to natural hazards and accelerating its adaptation to climate change by strengthening disaster risk management policy and competent institutions, as well as integrating disaster risk management into urban planning.
Finally, the third pillar will support actions aimed at ensuring more efficient use of natural resources and accelerating the shift towards low-carbon technologies, focusing on the energy and transportation sectors currently responsible for a third of Peru’s carbon emissions.
“The World Bank supports Peru’s efforts to build the foundations for greener, more resilient and inclusive economic growth that allows it to effectively absorb and weather external shocks,” says Marianne Fay, World Bank Director for Bolivia, Chile, Ecuador, and Peru. “This is the first of a series of two processes that will advance the transition to clean energy, more sustainable housing and transportation systems that support the development of more efficient and productive cities, among other benefits,” he adds.
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