CAF approves US$ 280 million in support of an infrastructure and social development program in Peru

With a US$ 280 million loan repayable in twelve and a half years plus a two years’ grace period, the Andean Development Corporation (CAF) today approved funding in support of the Economic Infrastructure and Social Development Program that the Government of Peru is implementing in order to come to grips with poverty and unemployment, while guaranteeing the sustainability of public finance.

As CAF Executive President Enrique García explained, the approval of this loan is in line with the CAF’s objectives of supporting its shareholder countries in the development of programs aimed at reducing the social gap, within a framework of transparency and equity in the administration of resources.

García emphasized that the CAF’s participation in the program being implemented by the Government represents 78% of its total cost, which comes to US$ 360 million, and that the objective is to support the country in its efforts to improve the planning, quality of the performance, and follow-up of public social spending through the financing of relevant economic and social infrastructure projects.

It is worth mentioning that the CAF provides Peru with support on a permanent basis through the financing of infrastructure and social investment projects, support for the revival of private investment to boost foreign trade, as well as the strengthening of small and medium-size enterprises with the purpose of encouraging growth and competitiveness. In view of this, the approved operation means the continuity of the Corporation’s support of innovative initiatives aimed at improving the living conditions of Peruvians within a framework of equity, inclusion, territoriality, and sustainability.

The CAF’s resources will be channelled as follows: US$ 140 million for improving the quality and control of social spending, which implies developing actions with regard to four relevant issues: 1) macroeconomic policy framework, 2) improving equity in transfers, 3) improving administrative records, and 4) following up and evaluating social spending; US$ 80 million will be allocated to social investment, with priority being given to four sectors: 1) agriculture, 2) social development, 3) education, and 4) cleanup; and US$ 60 million will be allocated to the area of economic infrastructure to meet transportation and energy needs.

It should be noted that the US$ 280 million loan approved by the CAF complements funding from the Peruvian Government’s economic program, in which there is major participation by organisms such as the Inter-American Development Bank (IDB) and the World Bank.