Overview of the Regional Operations Department II (RE2) February 10, 2004 Gilberto E. Chona Senior Economist, Country Division Regional Operations Department II (Mexico, Central American Isthmus, Haiti, and Dominican Republic)

Contents I. Introduction II. RE2 Sample Projects III. IDB Strategy in the Region

Introduction. RE2 Countries Belize Costa Rica Dominican Republic Salvador El Salvador GuatemalaHaitiMexico Honduras Nicaragua Panama

Introduction. IDB Presence The IDB is the Largest Lender in the Region

Introduction. RE2 Main Activities Preparation and administration of the Bank’s Lending & Technical Cooperation Programs for 10 Countries. Coordination of Co-financing and Trust Funds Activities for all LAC countries. Policy Dialogue Papers. Country (Bank Support) Strategies.

Introduction. RE2 Main Activities Economic and Sector Studies. Consultative Groups. Consensus Building. Assistance for Emergencies. Support for regional Initiatives: –Plan Puebla-Panama. –Transparency & Anti-Corruption. –HIPC Initiative. –Poverty Reduction Strategy. Country Economic Assessments.

Sectors of Activity ProductiveAgricultureIndustry Finance & Basic Infrastructure Sectors Energy Transportation Telecommunications Social Sectors EducationHealth Urban Development Environment Water & Sanitation Reforms Modernization of state and decentralization

RE2 Portfolio Largest Portfolio in Execution (193 projects for US$10.5 billion, aproximately 40% of the Bank’s Portfolio). US$5.1 Billion Undisbursed. Annual Lending Program is about 30 projects for US$1.2 to US$1.9 billion.

RE2 Portfolio Distribution by Number of Projects (as of sep. 2003)

RE2 Portfolio Distribution by Total Amount (as of sep. 2003)

RE2 Portfolio

RE2 Operations Cumulative Loans & Disbursements * ( ) *After cancellations and exchange adjustments. Totals may not add up due to rounding, includes private sector loans. millions of US$

RE2 Operations RE2 Operations 2003 Loans & Disbursements* *Preliminary Information millions of US$

Regional Operations Department II II. RE2 SAMPLE PROJECTS

RE2 Sample Projects Community Education (Mexico, US$210 million) Equity Enhancement Basic Education Program (Dominican Republic, US$80 million) Rural Production Reactivation Program (PRPR) (Nicaragua, US$60 million) Program for Rehabilitation of Basic Economic Infrastructure (Haiti, US$70 million) Supporting Food and Agricultural Sector Competitiveness (Dominican Republic, US$55 million) Judicial System Modernization Stage II (Honduras, US$30 million)

RE2 Sample Projects Program Against Urban Poverty (Guatemala, US$46.8 million) Electric Interconnection between Guatemala and Mexico (Guatemala, US$37.5 million) Improvement Road Integration Corridor PPP (Panama, 37 million) Capital Expenditure Electricity Distribution (Guatemala, US$25 million) Modernization of the State and Fiscal Reform (Nicaragua, US$25 million) Low-Income Housing Program (Nicaragua, US$22.5 million)

RE2 Sample: Project in Pipeline IMPROVEMENT OF THE PPP ATLANTIC CORRIDOR (Sections of the CA-5 Norte Highway) (US$30 million) PROCUREMENT OPPORTUNITIES PROJECT DESCRIPTION Consulting services needed: Expand the transportation capacity in the congested areas; Expand the transportation capacity in the congested areas; Rehabilitation of the pavement layer; Rehabilitation of the pavement layer; Building bridges and by-passes; Building bridges and by-passes; Rehabilitation and upgrading of critical sections of the Carretera del Norte (highway) CA-5. Valley of Comayagua, between Villanueva and La Barca).

RE2 Sample: Project in Pipeline HONDURAS: VOCATIONAL AND TECHNICAL EDUCATION PROGRAM (US$30,6 million) PROCUREMENT OPPORTUNITIES PROJECT DESCRIPTION Consulting services needed: Repair and expand school buildings: construct new classrooms in 50 schools; Repair and expand school buildings: construct new classrooms in 50 schools; Technical advice to improve school programs; Technical advice to improve school programs; Assessment of human resource allocation for the program; Assessment of human resource allocation for the program; Provide technical assistance and training to core staff. Provide technical assistance and training to core staff. Design promotion campaign for the program; Design promotion campaign for the program; Training for the unemployed; Training for the unemployed; Study on SSTSS Reengineering. Study on SSTSS Reengineering. To promote higher levels of qualification and employment for young people and adults.

RE2 Sample: Approved Project NICARAGUA: MULTISECTORIAL GLOBAL PROGRAM (US$30 million) PROCUREMENT OPPORTUNITIES PROJECT DESCRIPTION Consulting services needed: Strengthen the institutional capacity of the FNI, and to a lesser extent of IFIs; Strengthen the institutional capacity of the FNI, and to a lesser extent of IFIs; Design strategy to provide sustainable financing to businesses in all areas of the private sector; Design strategy to provide sustainable financing to businesses in all areas of the private sector; develop new FNI financial products such as partial guarantees for securitization of the portfolio; develop new FNI financial products such as partial guarantees for securitization of the portfolio; Develop database on sources of international financing for the private sector. Develop database on sources of international financing for the private sector. To support the development of private business, especially small and medium-sized enterprises, by expanding the supply of medium- and long-term financing.

RE2 Sample: Approved Project HONDURAS: SULA VALLEY CITIZENSHIP SECURITY (US$20 million) PROCUREMENT OPPORTUNITIES PROJECT DESCRIPTION Specialized consulting services needed: Training and awareness of workshops; Training and awareness of workshops; Design and implement processes and procedures to manage prevention and social assistance activities. Design and implement processes and procedures to manage prevention and social assistance activities. Strengthen monitoring and evaluation system with regional coverage through the MSPS; Strengthen monitoring and evaluation system with regional coverage through the MSPS; Office equipment, a pickup truck, office supplies and materials for training workshops; Office equipment, a pickup truck, office supplies and materials for training workshops; Civil Works: rehabilitation, lighting and construction of recreational infrastructure for social integration (multiple sports facilities, soccer fields and multi-use areas) and other social integration infrastructure (parks, community halls, cultural centers and libraries). Civil Works: rehabilitation, lighting and construction of recreational infrastructure for social integration (multiple sports facilities, soccer fields and multi-use areas) and other social integration infrastructure (parks, community halls, cultural centers and libraries). To improve peace, coexistence and citizen security in the 17 municipalities in the Sula Valley Region. Comprehensive activities for crime prevention and institution- building for municipalities and security institutions.

Regional Operations Department II III. IDB STRATEGY IN THE REGION

IDB Objectives in RE2 Countries Acceleration of Growth Poverty Reduction (income distribution and absolute level of Poverty)

Main Areas of Concentration Social Sector reforms (poverty reduction, local development and community and private sector participation). Competitiveness (regulatory framework for infrastructure investments, frameworks for financial and capital markets). Modernization of the State (decentralization, tax administration, Public budget processes, transparency, accountability). Regional Integration (environmental protection, disaster mitigation, National Reconstruction plans, -energy, transport and telecomm integration)

Challenges Long-Term Policies (Structural Challenges) Financial Regulation and Banking Systems Upgrades (Accounting, Disclosure) Public Expenditure needs to be re-engineered (targeting, etc.) Tax Burden needs to be equitably increased: Tax Reform vs Incentives Competitiveness and open trade: CAFTA

Challenges Short-Term Policies (All Difficult) Conservative Fiscal Policies: Spend less, Better; Save more. –Key constraint: how to increase tax revenues without economic growth, increasing exports? Relaxed monetary policies: to ease effect of slowdown in private investment and cash flow of firms Devaluation within inflation targets

IDB Strategy (National Level) Country Strategies (CS): A National Support Strategy Millennium Development Goals: –Development Effectiveness and Results –Note to self- Millennium Challenge Account (US) More Donor Coordination (SWAP approach) and Consultative Groups (CGs) Debt & Poverty Reduction – HIPC Initiative Competitiveness: Triggers for Growth Governance (Transparency, Anti-corruption, Rule-of- Law for people and businesses alike)

IDB Strategy (Regional Level) Regional Programming Paper (RPP): A regional Strategy. –Economic Growth –Human Development –Sustainable Development –Competitiveness, Trade: A cross-cutting issue Plan Puebla Panama (PPP): –Easy: Power (SIEPAC), Highways, Telecommunications. Difficult: Sustainable Development, Human Development, Prevention and Mitigation of Natural Disasters, Tourism, Customs.

Big Assumptions Free Trade will come: More opportunities for good growth. More, Better Governance: Executive, Congress, Judicial System Reform. Improved Investment Climate. More Civil Society Participation: Accountability and Service Delivery.

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