WBG: New Country Partnership Strategy for Mexico 2014-2019

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December 12, 2013

  • New approach to foster the twin goals of ending extreme poverty and promoting shared prosperity in a sustainable manner
  • Major themes include: productivity, public finances, social prosperity, green and inclusive growth

WASHINGTON D.C., December 12, 2013.- The World Bank’s Board of Executive Directors endorsed today the new Country Partnership Strategy (CPS) for the United Mexican States for the fiscal years 2014-2019. The CPS fosters the twin goals of ending extreme poverty and promoting shared prosperity in a sustainable manner.

To achieve these goals, the strategy agreed with the Mexican government identifies four thematic areas for WBG support:

·         Unleashing productivity by fostering sound financial sector development and facilitating access to finance, upgrading infrastructure, and generating a competitive business environment favorable to small and medium size enterprises (SME).   

·         Increasing social prosperity by promoting labor markets and moving toward a more efficient, effective, and integrated social protection system.

·         Strengthening public finances and government efficiency by improving public service delivery and implementing an integrated risk management strategy at national and subnational levels.

·         Promoting green and inclusive growth by reducing the footprint of growth, including urban planning, and managing natural assets under pressure focusing on forest, water management, and renewable energy.

The CPS defines the action plan and the results framework that were jointly prepared by the Government of Mexico and the World Bank Group (WBG), comprised by the World Bank (WB), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).

Unlike previous strategies, the new WBG country partnership strategy concentrates on a limited number of areas in which the combination of public and private efforts coupled with WBG support can have a transformative effect.

“This emphasis reflects a common effort to achieve better results on the ground”, said Gloria M. Grandolini, Country Director of the World Bank for Mexico and Colombia. “This means that policy interventions supported by the World Bank Group ought to affect productivity and consolidate a more inclusive social policy that makes sure the poor have access to health, education and social security. This also has to be done in the context of a sustainable management of natural resources”, she added.  

Grandolini said that “the time when development efforts were measured exclusively by the number of loans made belongs to the past; it is time to provide integral solutions using all sort of resources, not only financial, but risk management services, knowledge, convening and technical assistance where there’s also tangible value added”.

The new strategy will also continue to support Mexico’s role as a global knowledge leader by sharing globally Mexico’s best practice experiences in several areas, such as conditional cash transfers and adaptation and mitigation to climate change.

The WBG cooperation will improve effectiveness to achieving common goals in areas such as improving productivity and business climate, access to financial markets, and infrastructure development activities.

Infrastructure will remain as a priority for IFC operations in Mexico, in particular in strategic sectors such as logistics, energy and telecommunications. Expanding access to finance for small and medium enterprises (SME) is also central to IFC's strategy in the country.

For Roberto Albisetti, IFC Senior Manager for Mexico and Central America "it is vital to increase productivity, innovation and access to finance to promote inclusive and sustainable growth in Mexico. This has been acknowledged in this CPS which defines a shared strategy for the World Bank Group. "Last year, IFC committed USD$1.8 billion in sectors such as petrochemicals, agribusiness, solar energy and financial markets. This new partnership strengthens the IFC commitment to continue offering investment and to move capital and knowledge to the Mexican private sector”, he added.

Each of the four CPS themes will also integrate a gender perspective. During the recent years many much progress has been made in promulgation of laws and budget increases to enhance gender equality, nevertheless major challenges still need to be addressed. This CPS will thus support the implementation of the National Development Plan agenda on gender equality.

Some of the strategy’s expected results are to increase access to finance to 1.6 million Mexicans by 2015; to improve the business environment to support private sector investment at the subnational level; and to increase non-oil federal revenues from 15 to 18 percent of GDP.

The CPS also aims to increase skilled labor market participation by improving, by at least 10 percent, ENLACE scores; to promote private sector participation in social services provision; and to reduce deforestation and increase certified forests by 10 percent during the next five years.

World Bank (WB)

The WB will collaborate with the Government of Mexico on those areas that are expected to have the greatest impact on improvements in poverty and shared prosperity. This means that policy interventions supported by the WB ought to affect productivity to influence earnings; inclusiveness to make sure that the poor have access to health, education and social security; and sustainability so that the expansion of urban development and basic utilities do not deteriorate the resource base of the country.

The WB will continue supporting reforms to foster sound financial sector development, including the recently approved financial reform initiative. To contribute to unleashing productivity, the WB will increasingly focus on supporting policies that favor SME growth through regulatory simplification and removal of regulatory competition barriers. WB contribution will also concentrate in improving the coordination of policies aiming at taking innovations to firms in the productive sector and supporting private investments that boost innovation and productivity.

The WB will support efforts at designing and implementing second generation reforms in Mexico’s conditional cash transfer programs. It will also support Mexico’s efforts to address its fiscal challenges and will continue to provide technical support for enhancing the federal tax revenue system at national and subnational levels. The World Bank will also continue to provide several knowledge services on risk management, as well as a very robust program to support the reduction of the footprint of growth and to improve the efficiency in water utilities.

The International Finance Corporation (IFC)

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. IFC helps developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments in more than 100 countries. In FY13, IFC investments reached an all-time high of more than $25 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges.

The IFC strategy in Mexico focuses on promoting investment and advisory services that contribute to accelerate growth, improve competitiveness, promote social inclusion and reduce poverty. IFC’s current portfolio in Mexico reached US$2.2 billion. In 2012 alone, IFC projects helped to create more than 37 thousand new jobs, generated energy for more than 871 thousand people, and reached 226 thousand patients.

Multilateral Investment Guarantee Agency (MIGA)

MIGA promotes foreign direct investment (FDI) into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA can provide guarantees to increase cross-border investments by Mexican firms, including SMEs. It can also support Mexico’s infrastructure sector by attracting foreign participants in Public Private Partnerships (PPP) processes and by facilitating financing of public projects through its Non-Honoring of Financial Obligations (NHFO) product. As an emerging player, MIGA can contribute to the CPS’s effort by supporting foreign investments in carbon mitigating projects, waste management, water treatment and delivery, renewable energy, and other efficiency-related sectors.

News Source : WBG: New Country Partnership Strategy for Mexico 2014-2019

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