World Bank approves US$500m loan for basic infrastructure services in Colombia

The crisis caused by the pandemic has exerted considerable pressure on companies that provide basic services, such as electric power, water and sanitation, and public transportation.

The World Bank Board of Directors today approved a US$500 million loan to guarantee the continuity of and access to basic infrastructure services for the most vulnerable groups in Colombia. The financing will also promote the development of resilient, sustainable infrastructure in response to the Covid-19 crisis.  

The crisis caused by the pandemic has exerted considerable pressure on companies that provide basic services, such as electric power, water and sanitation, and public transportation. It also impacted infrastructure development. This loan seeks to support the Colombian government in its efforts to address the effects of the crisis on vulnerable sectors, establish policy guidelines for the economic recovery and advance reforms that promote the development of clean energy and sustainable transport.

“This operation is very important for Colombia. With it, the World Bank is supporting the most relevant efforts we’ve taken to respond adequately and promptly to the needs that the COVID-19 pandemic has generated in our infrastructure agenda, as well as in what we will implement for its reactivation and for the entire economy,” said Alberto Carrasquilla, Minister of Finance and Public Credit of Colombia. "Additionally, it will add important resources for the financing of the General Budget of the Nation."

The loan will support the following three pillars of the government program:

· Maintaining the provision of basic services and access to basic infrastructure through the financing of public service companies and public-private partnerships (PPP) that are experiencing financial difficulties. This will help guarantee service provision to the most vulnerable households and the productive sector. Additionally, the program will support the financial sustainability of basic household services, integrated urban mass transport systems and road infrastructure concessions in the country.

· Promoting the development of resilient, sustainable infrastructure for the economic recovery following the pandemic. The program will support measures to increase the efficiency and competitiveness of the energy, logistics and urban transport sectors, all with a focus on reducing carbon emissions. Examples include working to increase the use of alternative renewable energies, the volume of cargo shipped by river transport and the fleet of electric vehicles in the country.

· Providing long-term financing for sustainable infrastructure. These resources will strengthen the development of infrastructure through innovative government and private financing models that have been successful in other countries. The program will also focus on stimulating job creation.

“The infrastructure sector is a crucial component of a comprehensive strategy to rebuild the economy, mitigate the social impact and promote the country’s recovery while building the productive capacities of Colombian families,” said Ulrich Zachau, World Bank director for Colombia and Venezuela. “With this operation, we hope to positively impact job creation and competitiveness and growth, with a strong focus on climate change mitigation and adaptation.”

The Ministry of Energy and Mines, the Ministry of Transport, the Ministry of Housing, City and Territory and the National Planning Department will coordinate and implement this development policy financing (DPF). This operation forms part of the World Bank package to Colombia to support its response to the Covid-19 crisis, with a clear focus on economic recovery following an initial operation centred on the humanitarian response.