Peru: A Country Committed to Poverty Reduction and Shared Prosperity

When World Bank President Jim Yong Kim sets foot in Peru for his first stop in a 3-country visit, he will find a country in the big leagues of emerging economies, with sound levels of growth and its economic house in order. 

Peru has made big strides in the fight against poverty in the past five years, thanks to positive economic indicators and sound fiscal policies. But the country still faces many challenges.

With growth estimated at around 6%, it is currently one of the most dynamic economies in Latin America, ranking eighth out of the 10 fastest growing economies in the world.

This bonanza, driven by a boom in primary materials has led to reductions in poverty from 50% half-way during the last decade to 26% in 2012. This translates to 7 million Peruvians who are no longer poor. But inequality persists. The poverty gap between the country’s rural and urban areas remains wide:  17% compared to 53%, particularly in the regions of Ayacucho, Cajamarca and Apurimac.

This is the Peru that President Kim will find during his Latin American visit from June 29-July 7, which will also take him to Chile and Bolivia.

“Striving for shared growth isn’t just the right thing to do from a social and political perspective; it’s an economic imperative,” Kim said.

While economic growth is essential for the country’s development, it is not enough to eradicate poverty and inequality. According to experts, Peru needs to increase and improve infrastructure and social services, particularly in areas where the most vulnerable live. Water and sanitation, education, transportation, electricity and health services are all critical for achieving the continued well-being of citizens.

“Leaders must improve their ability to deliver services to the poor. Without improved capacity for quality delivery, even the best policies will mean little to their intended beneficiaries,” Kim noted. 

He added that the Bank will provide support in this area, by helping Latin American governments take a more scientific, evidence-based approach to the delivery of development services.   

The World Bank Group in Peru

For the past 60 years, the World Bank Group (WBG) has been implementing projects and providing technical assistance in key areas in Peru. Currently, the WBG’s strategy focuses on supporting the government in improving equity through social services, infrastructure and competitiveness, while continuing to preserve macroeconomic stability.

This year, the WBG has operations totaling US$ 1.99 billion, a figure which under the new Country Partnership Strategy could increase by as much as US$ 250 million a year until 2016.

In addition, the International Finance Corporation, (IFC) the Bank’s arm serving the private sector, has an investment portfolio of US$ 1.2 billion in Peru.

The WBG partnership with Peru is based on four strategic pillars:

· Increased access and quality of social services for the poor;

· Connecting the poor to services and markets;

· Promoting sustainable growth and productivity;

· Strengthening inclusive governance and public sector performance, with an emphasis on gender equality.