CAF announces US$4.50 billion financing for Peru

(Lima, July 12, 2006).- During an official visit to Peru, CAF President & CEO Enrique García held meetings with Peruvian President-Elect Alan García and leaders of the technical teams of the new administration to express the Corporation’s willingness to grant to Peru financing of about US$4.50 billion during the next 2006-2010 period in loans, partial guarantees and technical cooperation.

García said, "CAF confirms its commitment to the development of Peru, emphasizing its willingness, subject to presentation of specific programs and projects, to grant Peru finance for around US$4.50 billion for the public and private sectors, for infrastructure projects and social development." He added that the SMEs would continue to receive support from CAF to strengthen the sector as the engine of Peru’s economic growth, and all the region.

García said there was an understanding to achieve higher rates of economic growth, which was less volatile and more participative, where the benefits of the growth reach most people. "We have agreed to send missions, very early in your administration, after the sectoral authorities have been appointed, with the objective of designing and putting through an action program for the next five years," he added.

Considering that Peru has achieved a notable level of stability in the macroeconomic area, CAF is interested in strengthening public policies and the decentralization process. Along these lines, a US$400-million contingent line of credit was recently granted which favors the debt reprofiling strategy and fiscal sustainability.

CAF will concentrate its priority action in the following areas: Social development: Participation during the next five-year period in Peru will concentrate on growth policy - in a context of increased participation in the global economy. Mechanisms will be proposed to limit the undesirable effects of globalization on the unprotected sectors of the population.

Economic infrastructure: actions will be taken to narrow the infrastructure gap, mainly but not exclusively in three sectors: transport including mass transport, electricity, and telecommunications to provide the country with the appropriate logistical platform for improving competitiveness.

To strengthen these aspects, CAF will continue to give priority to integration processes by financing projects related to the South American Development Hubs (transport, energy and telecommunications) which concern Peru through the IIRSA initiative. The Corporation will also continue to support the border integration processes (CEBAF Bolivia-Peru, Ecuador-Peru Binational Fund).

Competitiveness, productive sector and MSMEs: In this area, priority will be given to actions that promote foreign trade, improve support infrastructure for production, and strengthen micro-, small- and medium-sized enterprises.

García also held meetings with high-level government authorities, including Pedro Pablo Kuczynski, president of the Council of Ministers; Fernando Zavala, minister of Economy and Finance; and Cecilia Blume, adviser to the President of the Council of Ministers. The president of the multilateral development bank also met with leaders of the main political parties and movements to exchange ideas on the need to protect the governance of the nation, maintain macroeconomic stability, and open spaces for action to obtain results in reducing poverty and social inequality.