Two loans granted to Bolivia for US$294 million

(La Paz, August 21, 2008).- A protocol ceremony in the Quemado Palace, in the presence of Bolivian President Evo Morales, ministers of State and important government authorities, CAF President & CEO Enrique García signed with Minister of Development Planning Graciela Toro two loan agreements totaling US$293.8 million, for execution of social and infrastructure projects in rural areas, and the connection of Tarija to the National Interconnected Electricity System (SIN).

The first loan for US$250 million will finance the Program of Social and Economic Infrastructure in Marginal Zones prepared by the Bolivian government which covers execution of social and infrastructure projects in the sectors of agriculture, water resources, potable water and sanitation, health, education transport and rural electrification.

García said the multilateral organization approved this loan to promote the saving of fiscal resources in the country, reduce service on the external debt and improve the future debt profile. "Bolivia, along with the other countries of the region, plans to take advantage of the international economic conditions of recent years to improve the service and profile of its public debt and CAF supports this regional effort," he said.

He added that the program to be financed by this loan is compatible with one of the principles of the Corporation's Integrated Development Agenda, which considers that equity, social inclusion and the creation of opportunities for all citizens are the main components for achieving the economic development and growth of the countries of the region.

The CAF support will be implemented through investments in social, productive and infrastructure projects which contribute to developing fiscal expenditure into an effective mechanism for promoting the country’s socioeconomic development.

"The second loan, which will finance the Punutuma-Tarija project, will make possible an uninterrupted power supply, without rationing, and expand coverage for consumers. It will also contribute to environmental conservation and improving Bolivian productivity," García said.

From the environmental viewpoint, the operation will contribute to two important aspects: first, Bolivia will move toward the use of clean energy (changing its energy matrix from diesel to hydroenergy) and, second, additional funds will be raised by implementation of the CAF Emissions Reduction Program.

The program will reduce carbon dioxide emissions into the atmosphere by reducing diesel consumption by around 20 million liters per year, and open the possibility for the country to include the project in the Clean Development Mechanism (CDM) of the Kyoto Protocol. About 100,000 tons of Emission Reductions could be placed on this market by 2012 which will improve the return on the project.

The loan for US$43.8 million – to be executed by Empresa Nacional de Electricidad (ENDE) - finances the connection of Tarija to the SIN, which will benefit this city and intermediate localities with a population of around 70,000 families. The project consists of a 252 km 230 kw power transmission line, and installation of optic fiber from the Punutuma substation in Potosí department to Tarija.