Safety Net
Because such a large proportion of Guatemala is population is poor, broad-based social initiatives rather than targeted safety nets are the most effective mechanism for reducing poverty in the short term. However, two recent developments present promising approaches to financing infrastructure improvements and supporting rural areas, both of which primarily benefit the poor. The government has established the Fondo de Inversion Social (FIS), supported by the World Bank, which finances but does not run labor-intensive projects proposed by local groups. The Fondo Nacional para la Paz (FONAPAZ) does a similar job but targets those affected by the armed conflict in the country. Both funds offer assistance in the areas of social services, economic and social infrastructure, and institutional strengthening.