The World Bank has approved a US$700 million loan to Ecuador that will allow the government to mitigate the impact of the pandemic and promote a green economic recovery, according to a statement released this Tuesday (1st).
The loan, the first in a series of three, has a variable rate and repayment term of 16.5 years, including a 5-year no-fee period.
It is based on two pillars. One focused on promoting “a more inclusive fiscal management, promoting growth and employment opportunities, reducing trade barriers and rigidities in the labor market, and strengthening mechanisms to support the most vulnerable groups”, such as the lowest-income people. and children with malnutrition, says the text.
The other pillar will promote private sector participation in financing unconventional renewable energy (NCRE) in the country, whose dollarized economy depends on crude oil. It will also seek to decarbonise the transport sector, measure greenhouse gases and develop voluntary carbon markets.
Ecuador, with 17.7 million inhabitants, is facing an economic crisis aggravated by the effects of covid-19.
Governments have to face the consequences of the pandemic “by thinking about solutions that allow sustainable growth, protecting those who need it most,” said Marianne Fay, World Bank director for Bolivia, Chile, Ecuador and Peru.
“Ecuador is taking important steps to advance along the path of ecological transition, which will allow it to build practices that are friendly to the planet and, at the same time, avoid the impact of climate change on the most vulnerable groups,” he added.
The Ecuadorian government describes the loan as “the recognition of Ecuador’s commitment to sustainable and equitable growth with the planet”, in the words of the Minister of Economy and Finance, Simón Cueva, quoted in the statement.
The Andean country’s economy contracted 7.8% in 2020 due to the coronavirus pandemic and, according to estimates by the Central Bank of Ecuador, grew by more than 4% in 2021. For 2022, growth of 2.5% is expected.
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