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A Blog about Public and Development Economics

El Salvador to Get $250 Million from World Bank

Like many developing countries throughout the world, El Salvador has been quite adversely affected by the global financial crisis. It is estimated that its GDP will contract by 1-1.5% in 2009, in stark contrast to the 4.8% growth that it enjoyed as recently as 2007. To make matters worse, El Salvador will be receiving far less external funding, which has been principally comprised of remittances from developed countries like the United States.

The World Bank has committed to a substantial $250 million loan to El Salvador to help mitigate the economic fallout from the contraction by funding public programs and social programs and to fuel job creation in the ailing country. From the World Bank’s press release:

Regional World Bank vice president Pamela Cox explained that these funds will focus on social protection, education, health care, job creation and the public sector, among other areas.

Cox emphasized the Bank’s commitment to supporting government plans “to promote inclusive development with opportunities for all, especially now that the global economy is facing a crisis.”

In fact, a large part of this amount —about $100 million— will be earmarked to support social expenditures, one of the most vulnerable areas in light of the global crisis. Part of the money will also be allocated to job creation, said Cox.

Newly elected president of El Salvador, Mauricio Funes, remarked “These loans are essential for us, without them we would not be able to implement the job creation programs we need to face the financial crisis.”

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Filed under: Development Economics, Fiscal Policy

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