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IDB supports the second phase of Peru’s water and sanitation reform program

The Inter-American Development Bank (IDB) has approved a US$130 million policy-based credit to the Peruvian Government, as part of an effort that will support the country’s Water and Sanitation Sector Reform Program.

Policy-based loans enable recipient governments to obtain resources that can be flexibly used to underwrite a variety of fiscal priorities. To obtain the loan, governments agree to carry out a specific policy reforms in a particular sector.

In this case, Peru has chosen to advance the second stage of a reform program that will facilitate investments in low-income communities that still lack basic water and sanitation services.

Specifically, Peruvian authorities will complete the development of regional sanitation plans, create a regulatory framework for sanitation services in small communities, set objective criteria to allocate public investment resources, and formulate a policy of incentives for investment finance in water and sanitation. The reforms are part of the Peruvian government’s Program “Agua Para Todos” (“Water for all”).

In 2007 the IBD approved a $100 million policy-based loan linked to the first phase of Peru’s Water and Sanitation Sector Reform Program. During that phase, the government laid the groundwork for regional sanitation plans and a coherent national system for establishing service rates and allocating investment resources.

“These reforms are essential to creating an environment that will enable Peru to expand coverage of sanitation services in an efficient, equitable and sustainable way,” said Sergio Campos, the IDB team leader for the program.

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