US$9.5 million for Paraguayan integration infrastructure

(Caracas, March 17, 2006). Enrique García, president & CEO of the Andean Development Corporation (CAF), and Ana María Figueredo Amaro, Paraguayan ambassador in Venezuela, on behalf of the Republic of Paraguay, today signed in the headquarters of the multilateral financial organization, a loan agreement for US$9.5 million in favor of Paraguay, to partially finance the Program of Works Supplementary to National Route 10. The executing agency is the Ministry of Public Works and Communications.

CAF President & CEO Enrique García emphasized the importance of this new loan as one more contribution by CAF to financing projects in the South American Regional Infrastructure Integration Initiative (IIRSA), designed to modernize the physical integration infrastructure of the region, in energy, telecommunications and transport, as essential element of the economic and social development process of South America. "Considering the priority that the Paraguayan government has given to construction and modernization of integration road corridors in the eastern region of the country, this loan will help improve the competitiveness of exportable products, the socioeconomic conditions of the population of the area, and will create incentives for the expansion of the agricultural frontier."

The total cost of the Program is US$13.8 million, with the CAF loan representing 69% and 31% contributed by Paraguay itself. The works and studies to be executed comprise the rehabilitation of 29 kilometers of access roads to RN 10, construction of toll booths, weighing stations and supplementary works such as drainage, safety and environmental protection as part of an environment and social management plan. The objective is to connect important agricultural areas located in the area of influence of RN 10 to the rest of the national economy, as well as developing aspects of logistics, modernization and road safety, with their resulting impact on improving the competitiveness of the country through lower transport costs.

The transport sector in Paraguay has been receiving support from CAF since 2000 through loans totaling US$80 million to finance integration infrastructure projects with national and regional impact, including the Paraguay-Bolivia Integration Corridors Project for US$60 million, the project "Rehabilitation and Paving of Integration Corridors, RN 11 and Branch to RN 10” for US$10 million, in cofinancing with the OPEC Fund which granted concessional funds in strategic alliance with CAF, complying with its catalytic role as provider of funds, and the US$9.5 million loan agreement signed on this occasion.

García said that a region with an increasingly integrated physical infrastructure, accompanied by other ongoing processes of social cohesion and integration, can overcome the obstacles to its development more effectively by reducing its vulnerability to external shocks and increasing its participation in the international economy.

Lastly, García said that CAF was considering for Paraguay a program of long-term loans which could cover 20 years for the 2006-2007 period. The program would include integration infrastructure projects for approximately US$100 million, including about US$40 million from the OPEC Fund.

The mix of OPEC concessional funds with CAF funds through the CAF-OPEC Fund cofinancing scheme offers special benefits to the country in terms, interest rates and grace periods, based on the inter-institutional cooperation agreement in effect between both organizations, which has been successfully initiated in Paraguay.