World Bank loans Ecuador $500 million for environmental and poverty reduction projects

The World Bank Board of Directors approved a US$500 million development policy loan for Ecuador to support government efforts to achieve inclusive, resilient and low-carbon development.

The World Bank loan includes support for wind farm development, like this one in Loja Province.

This is the third of three loans disbursed since the beginning of 2022. The first operation, for US$700 million, was approved in February 2022, and the second, for US$500 million, was approved in December 2022. These loans seek to support fiscal sustainability, protect the most vulnerable sectors and promote low-carbon development.

The new financing has two pillars. The first supports reforms to strengthen the fiscal framework by improving the institutional structure to address climate change challenges, including governance for the issuance of green bonds and the quantification of fiscal risk in public-private partnership projects. This pillar also backs reforms to strengthen social inclusion and resilience by promoting timely public service delivery to help reduce malnutrition and achieve gender equality in the economy in general, including in the electricity sector.

The second pillar includes actions to achieve low carbon development, prioritizing mitigation measures to help integrate climate and development to promote green growth and mobilize private capital. These reforms focus on mitigating climate change with the potential to leverage a green and resilient economic recovery by promoting private investment, fostering greater energy efficiency, supporting the development of voluntary carbon offset mechanisms and encouraging sustainable forest management.

The expected results of the policies supported by this operation include the identification of projects eligible for financing through green bonds, a broader reach of public services to reduce malnutrition, increased investments in non-conventional, renewable electricity and the reduction of forest loss. These structural changes are expected to foster growth potential, protect the vulnerable population and prepare the economy to address the challenges of climate change.
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Credit: World Bank