The Inter-American Development Bank today approved a $100 million policy based loan to help the government of Paraguay modernize its public management, in order to improve the quality, efficiency and transparency of public expenditures.
With IDB support, Paraguay will undertake a set of policy reforms to improve public expenditure management as a priority action in its Economic Reactivation Plan for coping with the possible effects of the international financial crisis—both this year and the next.
For example, under the loan Paraguay has committed to improve control procedures and systems for TEKOPORA, a conditional cash transfer program that provides payments to low-income families. The government’s goal is to increase the number of beneficiary families in the TEKOPORA Program from 18,000 to 120,000. Under the program, the IDB will help Paraguay consolidate databases related to TEKOPORA and encourage beneficiaries to use the formal banking system to receive payments, among other measures.
In recent years, Paraguay has carried out improvements in budget process, budget accounting and public procurement and has made progress with the implementation of an Integrated Financial Management System (SIAF). However, improvements are still needed in budget process efficiency, greater fiscal transparency and more integrated single treasure account management.
The loan will allow Paraguay to boost its institutional capacity in the public sector through the modernization of different public expenditure management processes and systems in a gradual and consistent way.
A public management modernization program will address macroeconomic stability, public policy coordination and efficiency (including more integration on planning and expenditure management and more efficiency in the social cash transfers programs), public expenditure management systems, public investment systems, and central government personnel administration.
The loan is for 20 years, with a five-year grace period, and carries a LIBOR-based fixed interest rate.
- Paul Constance