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IDB supports Peru’s climate change agenda

Peru will implement a climate change program that includes new tools to carry out its mitigation and adaptation agendas as well as strengthen its climate-related institutions, as part of a reform program supported by the Inter-American Development Bank.

The activities are among several measures Peru has agreed to carry out under a $25 million programmatic policy-based loan (PBL) approved by the IDB Board of Executive Directors. PBLs are fast-disbursing operations that provide IDB borrower governments with resources to finance priority programs, with results that must be verified as conditions for disbursements.

Under the climate change agenda program, Peru has committed to implementing specific activities to create the legal, institutional and technical conditions to prevent, mitigate and respond to climate change, as well as to take advantage of international investment and financing opportunities from carbon markets and adaptation funds, among others.

While Peru contributes minimally to global greenhouse gas emissions, it is among the most vulnerable countries to climate change due to the diversity of its ecosystems and climates and the predominance of climate-sensitive sectors in its economy: agriculture, mining, fishery and energy, among others. The economic activity of approximately one-third of its population is directly linked to these sectors.

An estimated 70 percent of the country’s population lives in areas sensitive to climate change such as the coastal desert and the Andean mountain region. Peru generates a significant percentage of its energy from hydroelectric sources vulnerable to droughts. These sources could also be affected by declining seasonal runoff from Andean glaciers, which have lost around 22 percent of their mass over the past 25 years.

Among the measures Peru will undertake are:

  • Preparation and consultation of the Action Plan for Climate Change Mitigation and Adaptation.
  • Establishment of the Climate Change Office in the Ministry of Environment.
  • Creation of the National Forest Conservation Program for Climate Change Mitigation.
  • Preparation of climate change vulnerability maps.
  • Identification and prioritization of fragile ecosystems.

In parallel, the IDB has committed more than $2.2 million in technical cooperation grants to Peru that support the objectives of this operation.

The IDB loan will be for 20 years, with a 5-year grace period and a variable interest rate based on LIBOR.

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