KfW and CAF Sign New USD 156 Million Credit Line for Urban Transport and Logistics Projects in Latin America
The two financial institutions have provided funds for investments in industrial environmental protection, water and sanitation, sustainable development of cities and urban mobility, among others, for over 40 years.
On behalf of Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), the Kreditanstalt für Wiederaufbau (KfW) (German Development Bank) awarded a new concessional line of credit for USD 156 million to CAF—development bank of Latin America—to promote sustainable development and integration of the region by financing projects that help improve urban transport.
This line of credit will target projects in urban rail transport systems (subways, trains, trams, and similar), integrated urban transport bus systems, cable transport (cable car and similar), integrated bicycle routes, electric mobility systems, signaling and logistics infrastructure, as well as other relevant urban transport systems in Latin America with a focus on mitigating climate change.
This will be the third line of credit signed by KfW and CAF specifically aimed at developing sustainable urban transport and logistics. The first agreement was signed in 2013 for USD 200 million and the second in 2017 for USD 118 million. These funds have been used to finance large-scale projects in the region such as subway systems in Ecuador, Peru and Panama, among others.
The impact of such concessional lines of credit is financially relevant as it reduces financial costs of projects, and therefore improves feasibility and project structuring (detailed and technical studies), among other benefits.
Over the past decade, CAF and KfW have finalized more than USD 1.4 billion in concessional lines of credit focused on CAF-funded projects in the region, and loans over the past 5 years alone total USD 659 million. In addition, non-reimbursable monies and cooperation funds have been disbursed to promote pre-feasibility, feasibility studies and implementation of CAF projects in their initial phase, thanks to the support of Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission through the Latin America Investment Facility (LAIF).
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