October 26, 2011 / 12:05 AM / 8 years ago

UPDATE 2-World Bank backs Humala's Peru with $3 bln loan

* World Bank extends $3 billion line of credit to Peru
    * Lender says shares Humala's priorities on social policy
    * Regional VP compares Humala to Brazil's Lula

    By Caroline Stauffer and Teresa Cespedes
    LIMA, Oct 25 (Reuters) - The World Bank has offered a $3
billion line of credit to Peru, backing President Ollanta
Humala's plans for anti-poverty initiatives and sustained
economic growth, a regional vice president said on Tuesday.
    The World Bank will soon begin talks with Peru to work out
the 2012-2016 lending framework covered by the loan package,
Vice President for Latin America Pamela Cox said.
    Humala was elected in June promising to better distribute
the fruits of a decade-long economic boom to the 1 in 3
Peruvians living in poverty. Though he once scared investors
with radical rhetoric, he now promises to keep free-market
reforms intact.
    "This is a vote of confidence in the sense that Peru's
macro-fundamentals are very strong," Cox told journalists after
meeting with Humala.
    She said the loan amount could be altered if Peru's
macro-economic position were to deteriorate, but that funding
would not be affected by a global economic crisis.
     Latin America will likely grow between 3.5 and 4 percent
in 2011 she said, cutting the bank's previous estimate of
between 4.5 and 5 percent for the region. Turmoil in developed
economies will likely reduce demand for the region's exports.
she said.
    Peru's economy is expected to grow 6 percent this year
after surging 8.8 percent in 2010, one of the world's fastest
rates. Cox said the World Bank loan would fund anti-poverty
initiatives and help build infrastructure that have lagged
Peru's fast growth.
    Humala's background and policy platforms resemble Brazil's
former President Luiz Inacio Lula da Silva, who rattled markets
when he was elected in 2002, Cox said.
    "Lula proved to be one of the most successful presidents in
Brazil," she said. "He reduced poverty, he grew the economy,
let's hope President Humala does that."
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