CAF approves US$216 million to finance major projects in Bolivia

The Andean Development Corporation (CAF) today approved at its CVI Board meeting a loan of US$216 million for Bolivia. The funds will finance an economic reactivation program and two important integration infrastructure projects, the executive president of the multilateral lending institution, Enrique García, announced.

The first of these operations, up to US$100 million, will provide part of the finance for the Special Economic Reactivation Fund (FERE), set up by the government of Bolivia to reschedule the portfolio of the national financial system, in an effort to grant relief to the productive sector and create better conditions for economic development.

With this decision, the Corporation is backing the Bolivian government’s efforts to put the country on the road to sustained growth, García said. The economic outlook for Bolivia in the medium term is positive and promising for the future of the country. The rescheduling of liabilities to longer dates of eight years, through FERE, will enable companies to improve their capacity to service their financial liabilities.

García explained that CAF’s participation in the Fund will be implemented through the acquisition of bonds to be issued by Nacional Financiera Boliviana (NAFIBO), backed by the General Treasury of the Nation.

Finance for infrastructure The CAF executive president also announced the approval for Bolivia of two operations for US$116 million to finance important infrastructure projects.

The first operation is a loan for US$42 million to partially finance the Road Rehabilitation and Maintenance Program, which is designed to improve the operating condition of five sections of highway that form part of Bolivia’s basic transport network: Puente Arce-Puente Sacramento (Chuquisaca), Tarabuco-Muyupampa (Chuquisaca), Challapata-Melgarejo-Ventilla (Oruro), Cuchu Ingenio-Potosí (Potosí) and Concepción-San Javier (Santa Cruz). The executing agency is the National Road Service.

The executive president said the operation comes under a World Bank financing program, Road Rehabilitation III, aimed at improving the Bolivian road system.

The project has an integrationist component since its development will improve communications between Bolivia’s principal cities and neighboring countries, reducing travel times and road accidents by at least half on the rehabilitated sections.

Co-financing with Brazil The second project approved for US$74 million is jointly financed by the CAF and Banco do Brasil. The loan comprises US$16 million from CAF and a credit of US$58 million from Proex, which cover 41% of the total cost of the project to upgrade and pave the Tarija-Bermejo highway.

To make viable the Brazilian finance, the CAF approved a credit guarantee for US$58 million for Bolivia which will give the country access to a matching loan to be granted by Banco do Brasil, as administrator of Proex. The remaining 59% of the total cost of the project is financed from previous CAF loans (21%) and contributions from the Republic of Bolivia (38%).

The paving the Tarija-Bermejo highway will put into operation the country’s important Route No. 1 (Desaguadero-El Alto de la Paz-Oruro-Potosí-Tarija-Bermejo) which has a privileged location linking the north of Argentina with Bolivia and Paraguay, and South American Integration Hub No. 10 (Bolivia-Paraguay-Brazil) with Hub No. 11 (Porto Alegre-Jujuy-Antofagasta).

The two operations are not expected to have an important environmental impact; however the necessary precautions have been taken to mitigate any effect should it occur.