MercoPress. South Atlantic News Agency

Praise and dollars from the World Bank to Peruvian president Humala

Can Humala become a Lula da Silva for Peru?

The World Bank has offered a 3 billion dollars line of credit to Peru, backing President Ollanta Humala's plans for anti-poverty initiatives and sustained economic growth, a regional vice president said this week.

The World Bank will soon begin talks with Peru to work out the 2012-2016 lending framework covered by the loan package, said Vice President for Latin America Pamela Cox who was accompanied by Hasan Tuluy who is to replace her next January 2012.

Humala was elected in June promising to better distribute the fruits of a decade-long economic boom to the 1 in 3 Peruvians living in poverty. Though he once scared investors with radical rhetoric, he now promises to keep free-market reforms intact.

“This is a vote of confidence in the sense that Peru's macro-fundamentals are very strong,” Cox told journalists after meeting with Humala.

She said the loan amount could be altered if Peru's macro-economic position were to deteriorate, but that funding would not be affected by a global economic crisis.

“We share President Humala’s priorities in terms of social inclusion, and we have thus committed our support in areas such as social programs, infrastructure, public services, State efficiency,” said Cox while adding that “middle term economic sustainability is linked to export diversification and the creation of added value.”

The WB has been providing technical assistance for measuring poverty, a results-assessment methodology for anti-poverty programs that condition cash transfers upon using services such as health controls and regular school attendance. This is the case with the “Juntos” program.

The new country partnership strategy between the WB and Peru will result from sector consultations and will be part of the work program undertaken with different multilateral agencies. Consultations involve the government, civil society, as well as grassroots and community social organizations.

There are currently 18 active projects in Peru totalling 1.9 billion, in areas such as rural electrification, water and sanitation, transport and the social sector.

The new 2012-2016 strategy will also include the country’s rural areas, fostering production activities that promote growth and create jobs for the poor.

Peru's economy is expected to grow 6% this year after surging 8.8% in 2010, one of the world's fastest rates. Cox said the World Bank loan would fund anti-poverty initiatives and help build infrastructure that have lagged Peru's fast growth.

Humala's background and policy platforms resemble Brazil's former President Lula da Silva, who rattled markets when he was elected in 2002, Cox said.

“Lula da Silva proved to be one of the most successful presidents in Brazil,” she said. “He reduced poverty, he grew the economy, let's hope President Humala does that”.