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Guatemala and the IDB

The Inter-American Development Bank is the leading source of multilateral lending for Guatemala, Central America’s largest economy. In almost half a century of operations it has approved more than $2.9 billion in loans for Guatemala and disbursed close to $2.4 billion.

Historically the IDB has financed projects in a wide range of sectors in Guatemala, including transportation, energy, water and sanitation, education, health, rural development, environmental protection and state reform.

The IDB played a key role in supporting Guatemala in the implementation of its 1996 Peace Accords, which put an end to more than three decades of civil war. The IDB chaired the consultative group meetings that coordinated the international community’s support for Guatemalan efforts to close the wounds opened by the protracted conflict. The focus of IDB operations was placed on poverty reduction, decentralization and community development.

At year-end 2006, the IDB’s portfolio in Guatemala included 19 projects for a total of $822 million in loans plus numerous technical cooperation projects financed with $34.9 million in grants from the Multilateral Investment Fund and the Social Entrepreneurship Program.

The IDB’s strategy in Guatemala is to promote social inclusion, productivity and good governance. Among the key sectors where the IDB is active are rural development, violence prevention and social investments in marginal areas.

The IDB also supports Guatemala’s efforts to deepen its integration with neighboring countries and the global economy. Among other initiatives, the IDB is financing the Central American System for Electricity Interconnection (SIEPAC), which combines the construction of a power transmission line from Panama to Guatemala and the creation of a regional market for wholesale electricity transactions. The IDB is also financing the construction of a interconnection between Guatemala’s and Mexico’s power grids. These projects, launched under the Puebla-Panama Plan for regional integration, will help Guatemala take advantage of the idle and lower-cost generation capacity in the rest of the region.

Guatemala was also one of the first IDB member countries to start projects under the Opportunities for the Majority initiative launched last year for economic advancement for low-income people in Latin America and the Caribbean.