World Bank Endorses USD258m Lending Facility For Costa Rica

by Leroy Baker, Tax-News.com, New York

09 September 2008

The World Bank Board of Directors endorsed late last week the new Country Partnership Strategy (CPS) for Costa Rica, which envisages a lending program of up to USD258m between August 2008 and December 2010.

The new partnership is based on a streamlined lending program for priority areas such as secondary education, prevention of catastrophic risks, telecommunications reform, and the comprehensive development of infrastructure in the country.

Additionally, the partnership includes an expanded program of analytic and advisory activities carefully tailored to country demands and that would respond in real time to emerging demands.

"The new partnership strategy for Costa Rica will support key areas of development for the country including competitiveness, disaster management and secondary education." explained Laura Frigenti, World Bank Country Director for Central America, adding:

"The strategy includes a combination of traditional and innovative financial instruments, technical assistance and fee for services.”

This will be accomplished by supporting the following operations:

• A catastrophic risk deferred draw-down operation (USD65m), which will provide Costa Rica a quick source of funds in the event of a major natural disaster, thus allowing a real time response to address emergency needs.
• A telecommunications reform project (USD13m) intended to bring global experience to modernize the telecommunications sector.
• A secondary education and skills development project (USD80m), complementing ongoing efforts by the Education Quality and Efficiency Project, which is improving the relevance of secondary education to labor market demands. This will be accomplished through a revamping of the curriculum, pedagogical methods, teacher training and updated equipment and technology.
• Puntarenas integrated infrastructure development project (USD100m) to be designed after the Puerto Limon operation approved in 2008. The project seeks to transform the Puntarenas area (including the nearby Caldera port) into a regional center of economic growth by revitalizing the port and urban environment, leveraging the interface and synergies between the port and the city, and increasing economic opportunities for the poorest households in this area.
• Technical assistance particularly in the poorest areas, with the objective of focalizing social assistance, competitiveness, domestic debt market development, pension’s assets management, and consolidation of health system reform.

In addition, the World Bank will support Costa Rica’s efforts to reduce greenhouse gas emissions through support from the Forest Carbon Partnership Facility (FCPC) to help design positive incentives for emissions reduction. This will build on the ongoing dialogue in the context of the payment for environmental services initiative.

As part of the new partnership strategy, the private sector arm of the World Bank Group, the International Finance Corporation (IFC), will continue working in the financial, infrastructure, health, education and agribusiness sectors.

The strategy is the result of a series of consultations with representatives of the Costa Rican government, civil society organizations, academic institutions, and political parties. The period covered by this CPS includes the remaining term of the administration of President Oscar Arias plus an additional period of seven months to prepare the succession of this strategy with the new government in 2010.

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