The World Bank on Wednesday announced it will loan Colombia $200 million in recognition of good fiscal management.
The World Bank Board of Directors approved a loan of $200 million to consolidate economic recovery and fiscal sustainability in Colombia. This marks the second of two loans designed to support the new budget program put forth by Colombian President Juan Manuel Santos.
According to a World Bank press release, the money will strengthen the government’s ability to better implement social programs that protect the most vulnerable in times of economic uncertainty.
“This transaction is a further step in the relationship between Colombia and the World Bank [that has been growing] for years and now [is] aimed to achieve progress on fiscal consolidation and modernization of the state in areas vital for development,” said Colombia’s Minister of Finance, Mauricio Cardenas.
According to the World Bank, the $200 million will go towards bolstering Colombia’s healthcare system, reducing vulnerability from natural disasters and supporting the Santos administration’s overhaul of the country’s convoluted tax system.
“We welcome the continuing efforts of Colombia to consolidate better fiscal management. Healthy finances with good tax and pension systems are fundamental to the development of any country,” said Gloria M. Grandolini, the World Bank Director for Mexico and Colombia.
The proposed tax reforms are expected to reduce Colombia’s structural fiscal deficit by 0.5% of GDP from 2011 to 2013. It is also expected to improve and expand healthcare coverage and increase the amount of insured agricultural lots.
This massive loan is part of the broader “Country Partnership Strategy” where the World Bank provides not just financial support but also gives explicit economic and governmental advice.
The Ministry of Finance and the National Planning Department will be responsible for allocating the $200 million over an 18-year period.