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Peru fights poverty with IDB assistance

The Inter-American Development Bank approved a $6 million loan to assist Peru’s fight against poverty by supporting its efforts to strengthen its conditional cash transfers, healthcare and employment programs and improve the targeting of social services.

The program’s main components are:

  • Conditional cash transfers - $970,000. The JUNTOS program benefits 450,000 poor households, mostly in rural areas of the highlands. In order to boost efficiency and ensure that beneficiaries comply with their responsibilities concerning their children’s education and healthcare, the program’s process of verification will be improved through the use of cellular phones and other modern technologies.
  • Comprehensive Health Insurance (SIS) - $820,000. The SIS currently has 10.5 million beneficiaries. Under this program, critical processes such as enrollment, payments to providers and administrative and medical audits will be strengthened.
  • Employment and enterprise formalization - $700,000. This component will promote changes to the legislation on micro and small enterprises in order to encourage business registration and to reduce the size of the underground economy. Additionally, a program combining job training, internships and grants will seek to increase workers’ access to formal employment.
  • Targeting of social services - $5,495,000. The program will strengthen the SISFOH household targeting system by providing its core unit more staff and equipment to certify two million households and maintain an updated database of beneficiaries of social programs.

The loan is for a 25-year term with a three-year grace period and a LIBOR-based variable interest rate.

Peru will provide $2.5 million in local counterpart funding to the program, which is also being supported by Germany’s GTZ and KfW aid agencies.