World Bank Supports Efforts to Achieve Growth with Equity and to Develop Cities in Colombia
The World Bank Board of Executive Directors approved a two-loan package today totaling US$1.4 billion to strengthen economic growth with equity in Colombia, on the one hand, and increase productivity and sustainability in Colombian cities, on the other. These Development Policy Loans (DPLs) were designed to support the Colombian administration’s budget program.
Growth with Equity in Colombia
The US$700 million loan seeks to support the Colombian government in consolidating a sustained growth path and economic development over the long term. The Treasury and Public Credit Ministry and the National Planning Department will be responsible for coordinating and executing this program.
“With this program, the World Bank supports and accompanies key policies that the country has put into force to achieve sustained and competitive economic growth, specifically through actions aimed at promoting investment, improve confidence and the business environment and increase employment and human capital formation” said Mauricio Cardenas, Minister of the Treasury and Public Credit. “We are very pleased to enjoy the support of the Bank on initiatives that will serve to improve our regulatory processes and credit access conditions among small and medium enterprises, as well as to increase the technical and professional capabilities of Colombian workers so that they can respond to their employers’ needs.”
The support of the World Bank will focus on three key areas:
- Increase access to credit among small and medium enterprises, as well as financing options available to fourth-generation infrastructure projects.
- Improve the quality and targeting of State efforts to develop productive skills of the Colombian workforce.
- Increase productivity by promoting innovation and an efficient regulatory environment for companies.
“The preparation of this program has broadened our dialogue with the government in terms of access to credit, competitiveness, innovation and trade,” said Gerardo Corrochano, World Bank Director for Mexico and Colombia. “We have established a continuous commitment with Colombia to develop new areas of technical support for the country.”
“With this program, the World Bank supports and accompanies key policies that the country has put into force to achieve sustained and competitive economic growth, specifically through actions aimed at promoting investment, improve confidence and the business environment and increase employment and human capital formation.”
– Mauricio Cardenas, Minister of the Treasury and Public Credit
Among other concrete results, it is expected that this financing will enable the implementation of a Secured Transactions Registry, which will increase access to credit among companies using movable assets as collateral. Furthermore, the Ministry of Labor will be accompanied during the promulgation of the necessary regulations for a new state employment service to establish a nation-wide skill certification system. The loan matures in 2034.
Consolidation of Colombia’s City System
The second loan, also totaling US$700 million, seeks to increase the productivity, sustainability and inclusiveness of Colombian cities. This DPL, responsibility of the National Planning Department, is designed to support the Colombian Government’s budget program and is the second one for this area.
“Currently, 85 percent of national GDP is generated in cities. Recognizing their role as engines of economic growth, the Government has just formulated public policy to consolidate Colombia’s City System, which includes the introduction of guidelines to improve urban mobility and reduce traffic congestion, create housing-access mechanisms and reduce settlements located in high-risk areas,” said Simon Gaviria, Director of the National Planning Department. “The second stage of the Productive and Sustainable Cities Program is of great importance, inasmuch as it will contribute to the fulfillment of the 2014-2018 National Development Plan’s objectives, linked to strategies aimed at strengthening the Cities System.”
Specifically, financing will be used in four key areas:
- Strengthen the institutional capacity to coordinate and finance regional and metropolitan initiatives.
- Promote access to housing among the poorest households.
- Promote urban connectivity and the policy framework to encourage regional infrastructure.
- Improve urban and metropolitan management and establish instruments to improve congestion and the provision of urban transportation services.
“According to estimates from the Cities Mission, by 2050 the Colombian population living in urban centers will reach 86 percent. Thus, it is imperative to support the country to ensure it is successful in building productive and sustainable cities that continue to function as engines for development and the eradication of poverty and inequity,” said Corrochano.
It is expected that this operation will result in, among other things, the acceleration of the regional-level urban connectivity and infrastructure financing process, to which end the Colombian Government will promote private investment and increase the development of transportation infrastructure projects in the country. Moreover, it will accompany the Ministry of Transportation in the design of an electronic tax collection system for vehicles in cities with more than 300,000 people. The loan matures in 2032.