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Regional Brief
The World Bank Group serves 30 countries in Latin America and the Caribbean (LAC), a region of great variety. The region is home to 534 million people, who speak Spanish, Portuguese, English, French, and some 400 indigenous languages. Three-quarters of the region's people live in and around cities, making it the most urbanized region in the developing world. Natural resources and agriculture are nevertheless important to the region's economies. In 2004, Latin America and the Caribbean experienced the strongest growth performance in 24 years, with growth of 6.3 percent up from 1.9 percent in 2003. Despite the ongoing recovery and improved economic prospects in recent years, LAC still faces the significant challenge of persistent poverty—due both to entrenched high inequality, exacerbated by the exclusion of marginal groups, and to modest and volatile growth in the last decades.  In Latin America and the Caribbean, economic growth rose only slightly through the 1990s, and poverty fell only slightly.  About one quarter of the region's population live in poverty (defined as living on less than $2 a day), roughly the same as in the late 1980s.  Approximately 50 million of these people (9.5 percent) are extremely poor (living on less than $1 a day). Inequality has played a fundamental role in Latin America's persistent income poverty and lagging income growth.  With an average Gini coefficient of 53, inequality is greater in Latin America than in every other region except Sub-Saharan Africa.  Inequality improved in some countries (Brazil) and deteriorated in others (Argentina) during the 1990s.  Inequality is exacerbated or determined by unequal access to institutions, assets, markets, services and social protection, as well as racial and ethnic discrimination.  World Bank Assistance The World Bank Group strategy in the region is inspired by a vision: Less poverty through higher and more stable growth, with reduced inequality and more inclusion.  The Bank's work is focused on achieving growth with equity to reduce poverty and its support is based on two fundamental pillars: (a) support to higher competitiveness, employment and growth, and (b) support to institutions to enhance equity, inclusion and sustainability.   World Bank lending to Latin America and the Caribbean reached $5.2 billion in fiscal year 2005, of which $4.9 billion were in International Bank for Reconstruction and Development (IBRD) loans and $261 million in International Development Association (IDA) credits.  During fiscal year 2005 the Bank made its first development policy loans to the region. The loans support the strengthening of social sectors in Bolivia, fiscal reform and housing sector policy in Brazil, broad-based growth in El Salvador, debt relief in Honduras, development of the financial sector in Honduras, and social program support in Uruguay.  New results-focused Country Assistance Strategies were prepared for the Dominican Republic, El Salvador, Guatemala, Jamaica, and Uruguay.  In Haiti the Bank supported development of a needs assessment (the Interim Cooperation Framework), endorsed a Transitional Support Strategy, and provided a first package of IDA credits and grants totaling $75 million. The Bank's analytical and advisory support to the region in fiscal 2005 included a flagship study of the contributions of the rural sector to national development. The Bank's latest major report on the region, Poverty Reduction and Growth: Virtuous and Vicious Circles, examines how poverty is hampering achievement of high and sustained growth rates in Latin America and the Caribbean. The report recommends packages of policies to convert vicious circles of low growth and high poverty into virtuous circles in which poverty reduction and high growth reinforce each other.  Increasing Competitiveness, Employment and Growth Across the region the Bank is assisting countries in their efforts to reduce the red tape that hinders private sector development and address the poor logistics that make products costly and businesses unprofitable. Major financing to the region in fiscal 2005 included a $658 million loan for programmatic fiscal reform and social security reform to Brazil, a $250 million loan to Mexico to support innovation for competitiveness, and a $200 million loan to Argentina for sustainable investment in infrastructure. In Central America, the Bank's portfolio of $69.36 million in ongoing loans is enhancing the competitiveness of firms in Honduras, Nicaragua, Guatemala and El Salvador and helping these countries meet the challenges of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA).  The Bank is supporting public sector reform efforts throughout the region. In Bolivia, the Bank helped the Government to set up an anti-corruption program that includes the establishment of a National Integrity Unit and a Judiciary Council.  In Jamaica, the Bank supported a public sector modernization project which helped to modernize selected public agencies.  In Mexico, a decentralization project, completed in 2001, increased the transparency and public accountability of the tax system and public finance in the regions and municipalities. The Bank's analytical and advisory support in fiscal 2005 included Public Expenditure Reviews and Investment Climate Surveys of several countries in the region, as well as reports on growth and competitiveness in the Caribbean and the Organization of Eastern Caribbean States (OECS). Empowering Poor People The Bank is promoting efforts to reduce poverty, improve poor people's access to basic services, and increase the participation of excluded groups by funding programs in health, education, environmental protection, social inclusion, and social protection.  Bank lending in fiscal year 2005 included $503 million for environmental sustainability and $503 million for housing reform in Brazil, $240 million for lifelong learning and $300 million for basic education in Mexico, and $260 million for disaster vulnerability reduction in Colombia.  The Bank supported countries' national anti-poverty plans by endorsing Poverty Reduction Strategy Paper (PRSP) progress reports for Guyana and Honduras. Its analytical and advisory support included a poverty assessment for Mexico, and regional studies on service delivery reform and indigenous people, poverty, and human development. Promoting greater participation and inclusion of women, indigenous peoples and other excluded groups is a priority for the Bank in LAC.  The Bank's 2003 study, Inequality in Latin America: Breaking with History?, contributed to research in this area.  In Mexico, the “Generosidad” project has helped to build greater gender equity, for example, by improving women's access to income-generation programs.  In Ecuador, Colombia and Guyana, Bank support has helped indigenous peoples and Afro-descendants gain title to thousands of hectares of land.  The Bank continues to engage in innovative approaches to ensuring social protection for the poor.  In Argentina, the Bank approved loans totaling $1.1 billion in 2003 to support the Heads of Household (Plan Jefes de Hogar) program and other social safety net programs.  The Bank previously supported Argentina's third social protection program (Trabajar) which, by project completion in 2002, had generated 464,102 temporary jobs for poor, unemployed workers and financed about 26,500 small projects.  The Bank works with LAC countries to reduce urban poverty and improve access to services for people living in poor urban areas.  In Guatemala, in the mid-1990s, Bank support for the “El Mezquital” urban upgrading project in Guatemala City helped reduce infant mortality in the area by 90 percent, reduce crime by 43 percent, and increase property values ten-fold in only two years.  In Colombia, the Bank helped finance a $32.3 million sewage system which is benefiting some 500,000 people in the capital, Bogota.  Countries in LAC have achieved impressive progress on education with Bank support.  In Grenada, a basic education project helped reduce repetition rates in secondary schools from 11.6 percent to 1.3 percent between 1994-95 and 2000-2001, while repetition rates in primary schools were halved.  In Mexico, a primary education project helped increase completion rates in early and elementary education (up to age 11) from 66 percent in 1994-95 to 80 percent in 2000-2001 in disadvantaged communities in 14 of Mexico's poorest states.  The Bank supports LAC countries' efforts to improve poor people's health and nutrition and their access to healthcare services.  A project in Mexico extended basic health services to about 9 million poor people in remote areas.  In Chile, two projects in the late 1990s helped to decentralize health services and improve efficiency in public health agencies.  In Brazil, the Bank supported the country's strategy to slow the rate of HIV/AIDS infection, contributing to a reduction of nearly 50 percent in the number of AIDS-related deaths, from 15,200 in 1995 to 8,400 in 2001.  Bank support for environmental sustainability in LAC includes both country-specific projects and international initiatives such as the Clean Air Initiative for Latin American Cities and the Mesoamerican Biological Corridor.  In Costa Rica, an ecomarkets project is helping to protect around 100,000 hectares of forests and enable small landowners, especially women and indigenous groups, to conserve and manage forest ecosystems.  In Brazil, a $350 million trust fund managed by the World Bank is supporting a program to preserve the Amazon rainforest.  Looking Ahead The region's political map is being redrawn this year. Elections in almost a third of the 30 countries the Bank serves will affect nearly half of the people living in the region. The Bank maintains dialogue with all major constituencies and candidates and is working with all governments to help ensure continuous support for the region's poor.   Updated March 2006

The World Bank Group serves 30 countries in Latin America and the Caribbean (LAC), a region of great variety. The region is home to 534 million people, who speak Spanish, Portuguese, English, French, and some 400 indigenous languages. Three-quarters of the region's people live in and around cities, making it the most urbanized region in the developing world. Natural resources and agriculture are nevertheless important to the region's economies.

In 2004, Latin America and the Caribbean experienced the strongest growth performance in 24 years, with growth of 6.3 percent up from 1.9 percent in 2003. Despite the ongoing recovery and improved economic prospects in recent years, LAC still faces the significant challenge of persistent poverty—due both to entrenched high inequality, exacerbated by the exclusion of marginal groups, and to modest and volatile growth in the last decades. 

In Latin America and the Caribbean, economic growth rose only slightly through the 1990s, and poverty fell only slightly.  About one quarter of the region's population live in poverty (defined as living on less than $2 a day), roughly the same as in the late 1980s.  Approximately 50 million of these people (9.5 percent) are extremely poor (living on less than $1 a day).

Inequality has played a fundamental role in Latin America's persistent income poverty and lagging income growth.  With an average Gini coefficient of 53, inequality is greater in Latin America than in every other region except Sub-Saharan Africa.  Inequality improved in some countries (Brazil) and deteriorated in others (Argentina) during the 1990s.  Inequality is exacerbated or determined by unequal access to institutions, assets, markets, services and social protection, as well as racial and ethnic discrimination. 

World Bank Assistance

The World Bank Group strategy in the region is inspired by a vision: Less poverty through higher and more stable growth, with reduced inequality and more inclusion.  The Bank's work is focused on achieving growth with equity to reduce poverty and its support is based on two fundamental pillars: (a) support to higher competitiveness, employment and growth, and (b) support to institutions to enhance equity, inclusion and sustainability.
 
World Bank lending to Latin America and the Caribbean reached $5.2 billion in fiscal year 2005, of which $4.9 billion were in International Bank for Reconstruction and Development (IBRD) loans and $261 million in International Development Association (IDA) credits. 

During fiscal year 2005 the Bank made its first development policy loans to the region. The loans support the strengthening of social sectors in Bolivia, fiscal reform and housing sector policy in Brazil, broad-based growth in El Salvador, debt relief in Honduras, development of the financial sector in Honduras, and social program support in Uruguay.  New results-focused Country Assistance Strategies were prepared for the Dominican Republic, El Salvador, Guatemala, Jamaica, and Uruguay.  In Haiti the Bank supported development of a needs assessment (the Interim Cooperation Framework), endorsed a Transitional Support Strategy, and provided a first package of IDA credits and grants totaling $75 million.

The Bank's analytical and advisory support to the region in fiscal 2005 included a flagship study of the contributions of the rural sector to national development. The Bank's latest major report on the region, Poverty Reduction and Growth: Virtuous and Vicious Circles, examines how poverty is hampering achievement of high and sustained growth rates in Latin America and the Caribbean. The report recommends packages of policies to convert vicious circles of low growth and high poverty into virtuous circles in which poverty reduction and high growth reinforce each other. 

Increasing Competitiveness, Employment and Growth

Across the region the Bank is assisting countries in their efforts to reduce the red tape that hinders private sector development and address the poor logistics that make products costly and businesses unprofitable. Major financing to the region in fiscal 2005 included a $658 million loan for programmatic fiscal reform and social security reform to Brazil, a $250 million loan to Mexico to support innovation for competitiveness, and a $200 million loan to Argentina for sustainable investment in infrastructure.

In Central America, the Bank's portfolio of $69.36 million in ongoing loans is enhancing the competitiveness of firms in Honduras, Nicaragua, Guatemala and El Salvador and helping these countries meet the challenges of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). 

The Bank is supporting public sector reform efforts throughout the region. In Bolivia, the Bank helped the Government to set up an anti-corruption program that includes the establishment of a National Integrity Unit and a Judiciary Council.  In Jamaica, the Bank supported a public sector modernization project which helped to modernize selected public agencies.  In Mexico, a decentralization project, completed in 2001, increased the transparency and public accountability of the tax system and public finance in the regions and municipalities.

The Bank's analytical and advisory support in fiscal 2005 included Public Expenditure Reviews and Investment Climate Surveys of several countries in the region, as well as reports on growth and competitiveness in the Caribbean and the Organization of Eastern Caribbean States (OECS).

Empowering Poor People

The Bank is promoting efforts to reduce poverty, improve poor people's access to basic services, and increase the participation of excluded groups by funding programs in health, education, environmental protection, social inclusion, and social protection. 

Bank lending in fiscal year 2005 included $503 million for environmental sustainability and $503 million for housing reform in Brazil, $240 million for lifelong learning and $300 million for basic education in Mexico, and $260 million for disaster vulnerability reduction in Colombia. 

The Bank supported countries' national anti-poverty plans by endorsing Poverty Reduction Strategy Paper (PRSP) progress reports for Guyana and Honduras. Its analytical and advisory support included a poverty assessment for Mexico, and regional studies on service delivery reform and indigenous people, poverty, and human development.

Promoting greater participation and inclusion of women, indigenous peoples and other excluded groups is a priority for the Bank in LAC.  The Bank's 2003 study, Inequality in Latin America: Breaking with History?, contributed to research in this area.  In Mexico, the “Generosidad” project has helped to build greater gender equity, for example, by improving women's access to income-generation programs.  In Ecuador, Colombia and Guyana, Bank support has helped indigenous peoples and Afro-descendants gain title to thousands of hectares of land. 

The Bank continues to engage in innovative approaches to ensuring social protection for the poor.  In Argentina, the Bank approved loans totaling $1.1 billion in 2003 to support the Heads of Household (Plan Jefes de Hogar) program and other social safety net programs.  The Bank previously supported Argentina's third social protection program (Trabajar) which, by project completion in 2002, had generated 464,102 temporary jobs for poor, unemployed workers and financed about 26,500 small projects. 

The Bank works with LAC countries to reduce urban poverty and improve access to services for people living in poor urban areas.  In Guatemala, in the mid-1990s, Bank support for the “El Mezquital” urban upgrading project in Guatemala City helped reduce infant mortality in the area by 90 percent, reduce crime by 43 percent, and increase property values ten-fold in only two years.  In Colombia, the Bank helped finance a $32.3 million sewage system which is benefiting some 500,000 people in the capital, Bogota. 

Countries in LAC have achieved impressive progress on education with Bank support.  In Grenada, a basic education project helped reduce repetition rates in secondary schools from 11.6 percent to 1.3 percent between 1994-95 and 2000-2001, while repetition rates in primary schools were halved.  In Mexico, a primary education project helped increase completion rates in early and elementary education (up to age 11) from 66 percent in 1994-95 to 80 percent in 2000-2001 in disadvantaged communities in 14 of Mexico's poorest states. 

The Bank supports LAC countries' efforts to improve poor people's health and nutrition and their access to healthcare services.  A project in Mexico extended basic health services to about 9 million poor people in remote areas.  In Chile, two projects in the late 1990s helped to decentralize health services and improve efficiency in public health agencies.  In Brazil, the Bank supported the country's strategy to slow the rate of HIV/AIDS infection, contributing to a reduction of nearly 50 percent in the number of AIDS-related deaths, from 15,200 in 1995 to 8,400 in 2001. 

Bank support for environmental sustainability in LAC includes both country-specific projects and international initiatives such as the Clean Air Initiative for Latin American Cities and the Mesoamerican Biological Corridor.  In Costa Rica, an ecomarkets project is helping to protect around 100,000 hectares of forests and enable small landowners, especially women and indigenous groups, to conserve and manage forest ecosystems.  In Brazil, a $350 million trust fund managed by the World Bank is supporting a program to preserve the Amazon rainforest. 

Looking Ahead

The region's political map is being redrawn this year. Elections in almost a third of the 30 countries the Bank serves will affect nearly half of the people living in the region. The Bank maintains dialogue with all major constituencies and candidates and is working with all governments to help ensure continuous support for the region's poor.

 

Updated March 2006

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