World Bank–El Salvador Partnership

A market in El Salvador. World Bank recently signed its 2016-2019 Country Partnership Framework, which aims to support the country's government in creating growth, inclusion and sustainability. Photo by: Christopher Porter / CC BY-NC-ND Since the end of the civil war in 1992, El Salvador has made great strides in improving its political and social conditions. However, several ills such as inequality, poverty and low growth indicators continue to persist. El Salvador is among the weakest economies in Central America, and growth has been sluggish in all sectors. Its annual gross domestic product growth only averages 1.5 percent and is below regional levels. In the strategic country diagnostics, three vicious circles impeding its growth and shared prosperity were identified – low growth and high violence, low growth and high migration, and low growth and low savings and investments. Because of their interconnectedness, breaking these circles of low growth equilibrium require ambitious and concerted efforts rather than marginal interventions. World Bank recently signed its 2016-2019 Country Partnership Framework which aims to support the government in creating growth, inclusion and sustainability. The new framework will be implemented in four years to align with the Salvadoran political cycle. Funding levels and priorities The bank’s current portfolio consists of five active International Bank for Reconstruction and Development projects amounting to $290 million and seven International Finance Corp. amounting to $142 million. Meanwhile, Multilateral Investment Guarantee Agency – the political risk insurance arm of the bank – has provided $92.3 million worth of guarantee coverage for an existing investment in the Salvadoran Fund Crecer. Shown on the table below are the commitments made by the bank from 2010–2015. The new framework aims to promote inclusive growth and foster resilience with focus on strengthening policies to combat the existing vicious circles. It stands on two pillars encompassing six objectives. During the first year, World Bank programming will include: ● Continuing the implementation of ongoing projects in education, health, social protection, local government and public engagement sectors. ● Scaling up and strengthening of engagement in interventions to enhance the Youth and Employability Skills Program ($130 million proposed). ● Building on lessons learned from the ongoing Income Support and Employability Project. ● Violence prevention and psycho-social intervention ($110 million proposed). The allocations for the succeeding years are yet to be determined. It can be expected that the bank will utilize support from trust funds and other sources to provide technical assistance to ensure the efficient and effective implementation of its development projects in El Salvador. Analysis The new framework was informed by dialogues with the government, civil society, private sector and non-government organizations, and feedback from “El Salvador Needs” – a bank-led project which gathered the opinions of Salvadoran citizens on the development priorities of the country. This participatory approach will help ensure the ownership and commitment of the Salvadorans in the development agenda. The bank is also closely coordinating with other multilateral and bilateral development partners to create synergy and avoid duplication of efforts. The bank is working with Central American Bank for Economic Integration, KfW, Japan International Cooperation Agency, GIZ, Spain, Italy and United Nations in crime and violence prevention. The World Bank also works with the European Union, Millennium Challenge Corporation and USAID on employment. Program implementation in El Salvador will be precarious due to the fragmented political environment, uncertain macroeconomic stability, weak institutional and implementation capacities and a fragile fiduciary context. To mitigate these risks, the World Bank will work closely with the government and other stakeholders. It will provide support to government agencies by lending its technical expertise and sharing best practices based on its global experience. At the same time, the bank will encourage both inter- and intra-institutional collaboration to ensure optimum results in aid delivery. Contact World Bank - El Salvador Tel: (+503) 2526-5900 Email: