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Peru to boost business productivity and competitiveness with $30 million IDB loan

Peru is carrying out reforms to increase productivity and business competitiveness in a program financed by a $30 million loan from the Inter-American Development Bank (IDB).

The program follows a previous operation approved in 2010. Its objective is to support reforms currently underway to improve the country’s business environment, strengthen its institutional framework for competitiveness and innovation, among others.

This second operation consists of three components: achieving macroeconomic stability, improving the business environment, and strengthening institutions and tools for supporting business innovation and competitiveness.

Over the years, Peru has significantly improved its standing on the World Bank’s Doing Businessindex, today ranking highest in Latin America and the Caribbean after Chile. In addition, the Global Competitiveness Index, developed by the World Economic Forum, ranks Peru 67 among 142 countries in 2011-2012, an improvement of 11 places compared to the 2009-2010 index.

However, the main obstacles to competitiveness in Peru continue to be weak institutions and infrastructure and deficiencies in innovation and business management.

The country is receiving IDB support to address these challenges by implementing microeconomic and institutional reforms to reduce transaction costs for businesses, especially smaller firms, and overcoming limitations that prevent the achievement of greater productivity and competitiveness.

The IDB loan has a term of eight years, a grace period of 60 months, and a variable interest rate based on LIBOR.