US$150 Million to Peru to Improve Results in Health, Nutrition and Education

"Peru has expanded the coverage of basic social programs over the past 15 years. It now seeks to improve their quality," said Marcelo Giugale, World Bank Director for Bolivia, Ecuador, Peru, and Venezuela. "The central objective of the government's program is to ensure that all Peruvian children have access to adequate health, nutrition and education. This is a very wise investment in the country's future, and the Bank is honored to support it."

Although Peru is a middle-income country, with near-universal coverage of primary education, only 15 percent of second grade students presently reach full sufficiency in literacy and roughly half are unable to read at all. In health, 25 percent of births nationwide are still not institutionally supported (rising to 45 percent in the 10 poorest departments), hampering efforts to reduce maternal and peri-natal mortality. Fully 30 percent of five year old children in Peru are chronically malnourished. In each case, the outcomes are particularly poor in rural areas and among indigenous communities.

The Results and Accountability (REACT) Development Policy Loan will strengthen Peru's basic education, health and nutrition services by supporting the following activities:

* Promoting transparent performance standards and encouraging parents and local governments to demand improvements.
* Assisting the ministries of Education, Health, and Women/Social Development to set standards for children's learning, health and nutrition outcomes, and establish goals for the proportion of children achieving them.
* Developing monitoring systems to track the performance of all health posts and schools, and to provide reports for parents on the health, nutrition and learning status of their children.
* Improving service quality, reducing exclusion, improving targeting and increasing the participation of poor communities in budgeting and program monitoring.

This is the first in a planned series of three Development Policy Loans (DPLs) to support the strengthening of Peru's social sector. The REACT DPL series is expected to improve second grade literacy (especially in rural schools), increase access to institutional births in the 10 poorest departments (covering a third of the population), and increase coverage of individualized growth monitoring and counseling for children under 24 months of age in areas with a high incidence of chronic malnutrition.

"The operation will support the development of a results-oriented social sector, in the context of the decentralization of education, health and nutrition programs," said Ian Walker, World Bank task manager for the operation. "In addition, it will improve the quality of the labor force through improved human capital formation, by increasing the proportion of Peru's children who grow properly, and who can read fluently."

The US$150 million, fixed-spread loan is repayable in 10.5 years, including six years of grace. -The World Bank