COVID-19 Crisis Response DPF

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The stand-alone Development Policy Financing (DPF) operation, for US 700 million dollars, supports the Government of Colombia’s response to the health, social and economic crisis caused by the COVID-19 pandemic. Colombia declared a national health emergency on March 12, 2020, the day after the World Health Organization declared the novel coronavirus a global pandemic. Since then, the Government has swiftly put in place (i) a comprehensive set of public health measures to stop the spread of the disease in the country and (ii) a package of fiscal measures amounting to COP 26.4 trillion (or 2.5 percent of gross domestic product [GDP]) to strengthen the capacity of the health system to manage the pandemic, mitigate the impact of the economic crisis on the poorest and most vulnerable households, and provide liquidity support to firms to keep them afloat, altogether limiting the economic and social fallout of the crisis. The development objective of this operation is to help Colombia: (i) support the capacity of the health system, (ii) provide income and nutrition support to poor and vulnerable households, and (iii) maintain liquidity and access to finance for firms, in response to COVID-19. This operation supports the Government’s response to the crisis, which will help prevent an even deeper adverse impact on the economy and household welfare. The mitigation measures supported by this Development Policy Loan (DPL) are estimated to keep around 632,000 people out of poverty, narrowing the crisis induced increase in the headcount poverty rate by around 1.3 percentage points. In addition, the program supported by the DPL helps create a path towards an effective recovery as well as supporting a longer-term development agenda in some key areas. The measures in many cases have been formulated based on technical assistance provided by the World Bank, highlighting the value-added of the World Bank’s engagement through this operation, and are in sectors where the World Bank has been engaged in recent years, allowing it to build on previous dialogue.