CAF celebrates its 40th anniversary with over US$70 billion approved for Latin American development

(Caracas, July 15, 2010).– Forty years after its creation in the 1970s with the Andean countries as founders, CAF has become a development bank of Latin American dimensions formed by 18 countries, which makes an important contribution to the sustainable development and integration of the region.

President & CEO Enrique García held a press conference today in Caracas to report on the performance of the institution. In his presentation he gave, "as example of the growth of CAF, approvals totaling US$108 million during the 1970-1974 five-year period compared with over US$33 billion in the last five years (2005-2009).” “The portfolio of the first five years – he added – did not reach US$10 million, while CAF’s investment portfolio is now US$12.60 billion."

"Our operating activity takes place in the framework of an integrated development agenda which aims to reconcile the objectives of macroeconomic stability, microeconomic efficiency, social equity and environmental balance in the countries of Latin America and the Caribbean," the CAF chief executive said.

In parallel with its growth, CAF has maintained its financial strength with consistent improvement in credit ratings; as a result, it is now the frequent issuer with the best risk ratings in Latin America and one of the leading multilateral financial organizations in the region.

The region can make the leap

Another of the topics covered by García was the situation in Latin America and its reaction to the effects of the global economic crisis. "In general, Latin America has made an effective response. At the end of 2009 and especially in 2010 most countries have had very positive macroeconomic indicators."

He said this was due in large part to the sound macroeconomic policies adopted, recovery of raw material prices and resumption of the flow of capital into the region. "All this has led to a cheaper external borrowing, recovery of stock markets and a strengthening of Latin American currencies."

However, he noted there were still important structural elements which limit development of the region. "These are relatively slow and low economic growth and productivity increases compared with other developing regions, heavy concentration on exports of raw materials, low level of savings and investment, and high levels of inequality and poverty."

For the CAF chief, "Latin America is at an important turning point where a window of opportunity for making a qualitative leap has opened, which means developing a pragmatic, integrated and long-term view, based on the fact that sustainable development requires a combination of stability, growth, equity, social inclusion and environmental sustainability."

Support for growth of the region

The dimension that CAF has acquired over 40 years has made the development bank into a valuable support for achieving the expected growth of the countries of the region. According to García "even in very difficult global economic conditions, CAF has given decisive countercyclical and timely backing to its shareholder countries, at the same time as obtaining highly satisfactory financial and operating results."

The CAF president said the dimension and scope of the development bank’s operations had expanded significantly and included financing infrastructure, social development projects and support for productive sectors, both public and private, in a context of environmental sustainability.

The institution has become the main source of multilateral financing for the Andean region and for infrastructure in Latin America, especially projects which promote regional integration. “In the last decade CAF approved US$6.30 billion for physical integration projects with a total investment of over US$ 21 billion."

CAF has become an important source of knowledge and promotion of technological development, at the same time as developing activities which strengthen competitiveness, stimulate the SME and microenterprise sector, enhance democratic governance, modernize and decentralize the State, and promote local, subnational and community development.

Integration is a necessity

"In this complex situation, it is essential for all us actors to revive the concept that integration is not a luxury but a necessity if we are to achieve a truly international presence and act as a global player with the required weight," García said.

On the role of multilateral agencies such as CAF, he said, "these institutions have to combine capacity and flexibility, indispensable for the countries, especially in times when access to financing is so difficult.”

In CAF’s case, although the institution came into being as an Andean entity, it now groups 18 Latin American countries and 95% of its ownership is in Latin American countries. "This gives us a genuine Latin American identity, which respects the point of view of its members while demonstrating efficiency, creativity and flexibility."

García emphasized the role of the institution he heads as an effective bridge between our continent and the world – notably the range of activities and agreements with European countries, China, Russia, India and Japan and others – and its catalytic role of bringing funds from other regions into Latin America.

In conclusion he said the successful development of CAF was due to the unwavering support of the shareholder countries, resulting in regular increases in capital, and full compliance with all its financial obligations.

In this respect, he recalled that last year the Board approved a US$2.50 billion increase in paid capital, together with the US$1.5 billion increase following the entry of Argentina, Brazil, Panama, Paraguay and Uruguay as full members. This process will double the institution’s capital over the next decade, to approximately US$12 billion, allowing CAF to triple its operations in response to the needs of the region.

As a result, CAF will have total assets of US$ 60 billion and take on a new dimension, much greater than at present, confirming its position as one of the leading Latin American sources of financing focused on the sustainable development and integration of our continent, which poses important challenges for the next decade.