CAF celebrates 30th anniversary in Bolivia

(La Paz, November 8, 2000).- CAF is commemorating its 30 years of foundation in Bolivia, country with which it has a close and dynamic relationship which has strengthened during the last decade when loans totaling US$2.166 billion were approved for the country.

As CAF President & CEO Enrique García said, the loan program is oriented to financing projects on Bolivia’s strategic menu; namely the private export sector, integration corridors, energy sector, financial and microfinance system, and capitalization and decentralization processes, along with programs to develop equitable distribution of economic benefits.

"A significant proportion of CAF funds - García said - go to backing development of road corridors to form a transport network with capacity to mobilize the export potential from Bolivia and other countries to the markets of Brazil, Argentina, Paraguay, Chile and Peru, or through Pacific ports, such as Ilo, Iquique, and Arica. These important highways include the Patacamaya-Tambo Quemado highway (which links Bolivia with the Pacific ports); the corridor to Argentina and Paraguay; the highways: Tarija-Bermejo, Trans-Chaco (financed through Paraguay), Yotaú-San Pablo, and San Pablo Casarabe; the corridor to Peru formed by the highways: Desaguadero-Ilo (financed through Peru), La Paz-Beni-Peruvian frontier, and Route of the Liberators."

Important projects in the energy sector include financing for several electricity generating and transmission projects for ENDE, COBEE, Guaracachi, and financing production and transport projects for YPFB. CAF is continuing its support for the sector through the private companies which capitalized the state companies, including a recent loan to Cooperativa de Teléfonos de Cochabamba (COMTECO). Many of these operations are under the A/B loan facility for the private sector, where CAF acts as catalytic agent in attracting finance from other financial institutions; for example, the operations with Soboce and COBEE.

CAF backing for the Bolivian financial sector was reflected in three initiatives: 1) channeling over US$500 million in short- and medium-term loans through commercial banks for lending to productive sectors; 2) equity participation in Nacional Financiera Boliviana (NAFIBO), which operates as a wholesale bank for the private sector; and 3) US$100 million for creation of the Financial System Development Fund (FONDESIF), with the objective of capitalizing banks, during the financial crisis of 1996, through a market mechanism.

CAF backing for the privatization and capitalization processes took the form of granting over US$1 million in non-reimbursable technical assistance for investment banking services to explore potential investor markets, prepare "producto Bolivia" for selling on those markets, and modernize the institutional network which managed the privatization program, and the system of superintendencies which had to be in place to regulate the privatized sectors.

CAF support for programs to foster social and economic equity in the country has been provided in two main ways: first, concessional financing and non-reimbursable technical assistance for rural development, which IFAD provides through CAF; second, development of the microenterprise sector: long-term funds have been channeled for microenterprises through private funds specialized in serving the sector. The main support operations for microenterprise in Bolivia include facilities for BancoSol, Caja Los Andes, FIE Financial Fund and PRODEM, which total almost US$8 million. The Corporation also implements a pilot program for Integrated Support for Small- and Medium-Sized Enterprises (SMEs). CAF participation in the microenterprise sector backs creation of sources of employment, which has an impact on improving the living conditions in the country. The SME sector employs about 60% of the working population of Bolivia. With funds from the Human Development Fund (FONDESHU), CAF also supports various social impact projects, especially the Anthropologists Foundation of the South Andes (ASUR) which benefits indigenous families in the south of the country.

The experience of the Santa Cruz-San Pablo gas pipeline is a good example of how CAF’s catalytic presence and leadership can be a decisive factor in developing a major project which encountered structuring difficulties. The approval of a US$215 million loan for this project was a key component in finalizing its financial structure. The package for the gas pipeline, which CAF cofinanced in its Bolivian and Brazilian sections, was negotiated and structured with PETROBRAS and the Republic of Brazil, formula which avoided increasing the Bolivian external debt.

To help Bolivia meet its challenges of completing sectoral reforms and exploiting its advantages for stimulating sustainable growth and raising competitiveness, CAF is redirecting its future lending strategy to concentrate more on backing for the private sector, by expanding actions for financing infrastructure and basic services. There is total willingness to experiment with innovative financing schemes.

30 years at the region’s side CAF reaches its 30 years assuming the challenges of its shareholder countries, the five members of the Andean Community and seven Latin American and Caribbean countries which belong to other integration mechanisms such as Mercosur, FTA and Caricom.

Since its creation CAF has contributed, flexibly and opportunely, to the economic expansion of the Andean region and has been a leading catalytic agent in mobilizing funds from the industrialized countries, taking advantage of business opportunities and investment promotion.

In the words of Enrique García, "during the 1990-2000 period, CAF became the leading multilateral source of funds for the Andean region, providing finance to promote integration, execute infrastructure projects, strengthen the financial sector; for installation, expansion and modernization of industrial plant; along with international trade operations, provision of working capital and technical cooperation."

Since 1992, the Corporation has directed its efforts to generating funds through placements on international capital markets, which are used to finance priority projects based on the sustainable development of shareholder countries, raise competitiveness, and contribute to the regional integration process. Placement of these issues is part of the financial strategy of expanding the investor base in an effort to channel capital on attractive conditions into the region.

CAF serves clients in the public and private sectors on an equal basis. It also acts as wholesale bank for microfinance and SMEs, and participates as shareholder in various funds whose objective is to relieve poverty and promote environmental sustainability.

CAF is a multilateral financial institution whose mission is to support the sustainable development of its shareholder countries and regional integration. It is now the main source of multilateral financing for the Andean Community, contributing in the last decade over 40% of the funds granted to them by multilateral organizations. It is the Latin American issuer with the best risk ratings assigned by Moody’s, Standard & Poor's and Fitch. CAF is formed currently by 12 countries of Latin America and the Caribbean. The main shareholders are the five members of the Andean Community: Bolivia, Colombia, Ecuador, Peru and Venezuela, together with seven extra-regional partners: Brazil, Chile, Jamaica, Mexico, Panama, Paraguay, Trinidad and Tobago, and 22 private banks from the Andean region. With headquarters in Caracas, Venezuela, CAF has representative offices La Paz, Bogota, Quito and Lima.