March 2002

THE IDB AND THE SOCIAL SECTORS

IDB DIRECTS HALF OF 2001 LENDING FOR SOCIAL INVESTMENTS

Bank exceeds goals for poverty reduction and social equity

The Inter-American Development Bank approved a total of nearly $4 billion in loans for operations to support poverty reduction and social equity in 2001. The amount of lending and number of operations, which represented half of the year's total lending, exceeds the goals established by the Bank's governors for such operations.

The Bank's cumulative lending for poverty reduction and social equity between 1994 and 2001 total 45 percent of the number of projects and 44.1 percent of overall lending.

In his year-end report to the Bank's Board of Executive Directors, IDB President Enrique V. Iglesias noted the continuing importance of lending for social objectives, citing the economic downturn in the region and the effect it is having on a region. Poverty continues to be widespread, he noted, and income is "the most unequal in the world." It is estimated that more than one-third of the region's population currently lives below the poverty line.

Last year's social lending focused on improving access to economic resources for low-income people as well as strengthening social infrastructure in education, health, nutrition, and urban development. Project benefits were directed in particular to rural people, women, children and the excluded.

In the area of education, operations were aimed at reducing social inequities by giving children more years of schooling and making young people from poor families more employable. In Bolivia, for example, the Bank approved a $6 million loan to design a vocational and technology training system to enable low-income people to find jobs.

Operations for environment and natural disaster rehabilitation last year included a loan for $21.8 million for a regional program to promote sustainable natural resource management in the Upper Lempa River Basin in El Salvador, Guatemala, and Honduras. An early warning and monitoring system will help prevent or mitigate natural disasters, particularly landslides and floods. Two loans totaling $40 million to El Salvador and one for $20 million to Peru were made to contain the human and material toll in the wake of earthquakes. In Ecuador, technical cooperation projects were approved for feasibility studies for the sustainable development of three Amazonian provinces and to support the Galapagos Marine Research Fund.

In the area of health, the Bank provided support to two sector reform projects in Panama and Uruguay. The Panama project will expand basic coverage to many of the country's poorest citizens with the assistance of civic groups, religious organizations, cooperatives, and other nongovernmental organizations. The Uruguayan program will strengthen private and public health systems, increase competition, and reduce costs.

Also, the Bank approved a $1 million grant for Haiti to launch a basic health care and HIV/AIDS support program.

The focus of the Bank's water and sanitation operations in 2001 was to increase services in rural and low-income areas and to improve the efficiency of policy and regulatory agencies. In Brazil, a $100 million loan will improve water and sanitation services for low-income people in small urban communities.

Bank’s support for social programs, designed to ease the impact of the economic crisis on the poor, last year included operations for Ecuador, El Salvador, Guyana, Jamaica, and Nicaragua. In Brazil, the Bank lent $500 million to improve access to health, education, and social assistance for the poorest 10 percent of the country's population.

A major objective of the Bank is to promote social inclusion policies and projects targeting those excluded for reasons of ethnicity or race, gender, disability and HIV/AIDS. As part of these efforts, it assists indigenous and Afro-Latin American communities to participate fully in their countries' economic and social development. In Chile, a $35 million IDB loan in 2001 will foster development of indigenous communities while enabling the people to preserve their cultural traditions. In Honduras, a $1.6 million loan will finance infrastructure for black and indigenous communities and promote gender equity.

Bank lending last year also aimed to improve the quality of urban life by improving housing in run-down neighborhoods and meeting infrastructure needs. A $70 billion loan to Brazil will fund tenement rehabilitation and other urban renewal initiatives in the state of Sao Paulo. In El Salvador, a $70 million IDB loan will improve the efficiency of the housing sector by improving mortgage markets, maximizing the benefits of housing subsidies, and strengthening the sector's regulatory and institutional framework.