World Bank US$90M loan aids Dominican poor, disaster response

WASHINGTON- Today the World Bank’s Board of Directors approved two loans totaling US$90 million for the Dominican Republic to enhance performance results in the social sector, which will benefit 600,000 low-income households, as well as improve the response capacity of key institutions in the management of future disasters.

The Third Performance and Accountability of Social Sectors Development Policy Loan (PASS DPL), for US$70 million, is part of a series of loans that seek to enhance human capital, mainly in education and health, and to improve transparency and quality of public expenditure through a performance-based system. These policies have a major impact on reducing poverty and promoting sustained growth and equal opportunities.

The third loan was included in the World Bank’s Partnership Strategy with the country for 2010-2013. The first two operations were approved in November 2009 and November 2010, respectively, for US$150 million each.

“This World Bank operation contributes to the social protection policies of the current government administration, whose purpose is to support the poorest families in times of crises and to offer poor Dominicans, as subjects with rights, equal opportunities to improve their living conditions,” said Rafael Alburquerque, Vice President of the Dominican Republic and Coordinator of the Social Policy Coordination Cabinet.

The third PASS DPL seeks to:

· Enhance the performance of social sectors to promote human capital (health, nutrition, education) for the poorest citizens, through a fundamental redesign of the government’s Conditional Cash Transfer (CCT) program, Solidaridad, and its articulation with critical actions in health and education.

· Improve budget management to support the joint performance of the social sectors within the CCT program.

· Support the creation of a culture of results in budget management and public expenditure, through the gradual introduction of performance agreements in key social sector agencies.

· Enhance national budget transparency and civil society oversight.

“This third programmatic loan supports the government in improving performance of institutions and transparency in the allocation and use of resources in the social sectors,” said Daniel Toribio, Minister of Finance of the Dominican Republic.

The PASS DPL series has demonstrated that it is possible to work effectively with other projects of the World Bank and other donors. In the social sectors, the PASS program is designed to close the traditional gap between sectors to jointly address many of the issues that hinder performance and accountability.

“This new loan is in keeping with government efforts and projects in the area of public sector reform, and particularly in enhancing the human capital of the poorest citizens,” said Françoise Clottes, World Bank Director for the Caribbean.

The new US$70 million loan will be disbursed to the national budget in a single installment. It is a fixed-spread loan with a 30-year maturity, including a grace period of 4.5 years.

US$20 million for disaster-risk management

For its part, the Emergency Recovery and Disaster Management Project received an additional US$20 million loan to complete the rehabilitation and repair of infrastructure damaged by tropical storms Noel and Olga in 2007 in the water resource (irrigation, hydrology) and electricity sectors, as well as to strengthen institutional capacity for disaster mitigation and risk reduction. The project directly benefits six million citizens in 26 of the 32 affected provinces.

The original project, for US$80 million, was approved by the Board of Directors in May 2008 and by the Dominican Legislature in early 2009. The entities responsibility for project coordination and implementation are the National Institute of Hydraulic Resources (INDRHI) and the Dominican Corporation of State Electric Companies (CDEEE).

The additional US$20 million, fixed-spread loan has a 30-year maturity, including a grace period of 4.5 years.

With respect to the new operations, Roby Senderowitsch, Resident Representative of the World Bank in the country, said that “in times of global crisis and uncertainty like what we are experiencing today, the approval of these loans is extremely timely for continued support of the country in its social protection programs for the most vulnerable.”