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Peru to implement social sector reforms with IDB support

The Inter-American Development Bank (IDB) has approved a $30 million loan to the government of Peru to support social sector reform. It is the third of three loans to foster human capital development and increase employment opportunities. 

The goal of this third phase is to support government efforts to consolidate policy instruments used in its anti-poverty and social inclusion strategy. In particular, it intends to consolidate the National Program of Direct Support for the Very Poor (Juntos), which aims to interrupt the transmission of poverty from one generation to another. 

The operation also supports the government’s Comprehensive Health Insurance Program, which provides health services for people not covered by Social Security; improves participants’ employability through job-training programs, such as Trabaja Perú, Jóvenes a la Obra, and the One-Stop Employment Promotion Window. In addition, it will strengthen the Household Targeting System (SISFOH). 

The first two phases of the loan program were approved in 2009 for $50 million and in 2010 for $100 million. During these early phases, the government sought to raise program efficiency and extend coverage by improving operating processes, information systems, monitoring, and evaluation. 

"This operation is designed to help the government to consolidate the efforts to improve the effectiveness, efficiency, and targeting of key labor and social programs," said María Fernanda Merino, IDB project team leader. 

Loans to support policy reform provide the recipient government withresources that can be used flexibly to meet priority fiscal needs. For a loan of this type, governments commit to specific policy reforms in a particular sector. 

The IDB loan has a 12.75-year term with interest based on LIBOR.