The World Bank has approved a US$119.8-million loan to the Dominican government aimed at alleviating the effects of the economic crisis – especially the power predicament – and towards financial sector reform and consumer protection. According to the World Bank, US$12.5 million of those funds will contribute to poverty reduction and sustainable development by strengthening the institutional capacity of the monetary authorities as a way to improve the design and implementation of monetary and fiscal policies. In addition, the project will reinforce the institutional capacity of the financial regulatory agencies in order to reduce risks and increase efficiency, transparency and accountability of financial activities. Another US$7.3 million will go towards strengthening the government’s regulatory and consumer protection performance, improving policy formulation and portfolio management, protecting the environment and enhancing the wholesale power market and better quality of electric service for the poor. The bulk of the loan, called the Social Crisis Response Adjustment Loan, is worth US$100 million and aims to reduce the social impacts of the current economic and social crisis in both the electrical and social sectors. It will also support efforts to better manage electricity subsidies, improve performance and reduce poverty by targeting of social services with the following initiatives: Protecting 2004 budget levels for key social assistance and power sector programs needed to cushion social impacts of the crisis; strengthening social assistance programs to better target their resources to the poor and reach the largely excluded population which lacks official documentation; extending health insurance to all; streamlining the fragmented social assistance programs; introducing evaluation and civil society monitoring of social programs; and providing financial support to permit the urgent importation of fuel to generate electricity for national distribution and better target power subsidies to society’s poorest members.
The loan agreement will be signed in Washington today by Dominican Ambassador Hugo Guiliani Cury before being presented to the Dominican Congress for ratification. Technical Secretary to the Presidency Carlos Despradel said these funds would enable the authorities to purchase fuel, and in turn would take the pressure off the exchange market “because the generating companies will no longer have to buy currency on the open market.” The World Bank said that the use of the funds would be monitored, as is usual in these cases, by independent auditors. “This loan will help protect the poor and most vulnerable sectors during these difficult times,” said Caroline Anstay, World Bank Caribbean regional director.
For more details of the loan go to the World Bank’s website at http://web.worldbank.org/.
A separate loan for US$100 million is expected from the Inter American Development Bank (IDB) later this month.