The Inter-American Development Bank today announced the approval of a $100 million loan to help strengthen and consolidate El Salvador’s social safety network for its poorest citizens.
The fast disbursing financing will support El Salvador’s social policy for poverty reduction, particularly its efforts to improve its targeting instruments to reach the families with the greatest needs. The country’s poverty map will be complemented with family censuses and a set of variables to classify and select beneficiary households.
The program will improve coordination among institutions that play a role in the social policy for poverty reduction. Interagency collaboration will be strengthened at the leadership and technical levels and support will be provided to municipal committees in the field. Budget coordination and management tools will be developed to ensure the continuity and sustainability of efforts to assist the poor.
Citizen participation mechanisms will be strengthened to help community committees play their social auditing role in social programs and to convey the demands of beneficiary families to the agencies and non governmental organizations involved in delivering social services to the poor.
The program will also support the monitoring and evaluation of social services to gauge their effectiveness and beneficiary satisfaction. Technical studies will be carried out to improve the quality of social services and to help develop a medium- and long-term vision of the social policy for poverty reduction.
This operation would be the first of a series of three policy-based loans totaling $300 million to help strengthen El Salvador’s social safety network for the extremely poor with a state policy vision.
The loan is for 20 years, with a five-year grace period. Interest costs will be partially covered by the IDB’s Intermediate Financing Facility. In terms of financial costs, this source may be more convenient for El Salvador than issuing bonds, particularly in a context of rising international interest rates.